Tax tribunal drops remark against Mistry in Tata order

2020-12-31 22:30:00

MUMBAI: Two days after passing critical remarks against Cyrus Mistry, the Income Tax Appellate Tribunal (ITAT) has issued a corrigendum, stating “some inadvertent errors” had crept into its order involving the Sir Dorabji Tata Trust and it has been “rectified”.
The modified order has removed certain observations against Mistry about his intent to supply documents related to Tata Trusts and acknowledged that the information sent by the former Tata Sons chairman was in response to summons issued by the commissioner (exemptions). Mistry was named in the December 28 order, despite not being part of the proceedings involving Tata Trusts.
On Thursday, Mistry’s office said that responding to summons was a requirement under the law and even the Articles of Tata Sons envisage disclosure of information, when required to do so by a court of law. “One fact, which was inadvertently missed out, was that the information furnished by Mistry was in response to a notice,” the ITAT clarified on Wednesday. The “mistakes stand rectified” and, to that extent, the December 28 order “stands modified”, the corrigendum, signed by president P P Bhatt and VP Pramod Kumar, stated.
The previous order had remarked that Mistry’s action of supplying documents to the department without any authorisation from Tata Sons, even though they were obtained by him in the fiduciary capacity, almost immediately after being removed as its chairman, cannot be said to be “influenced by call of a pure conscience and high ground of morality…”
On Wednesday, the ITAT dropped this reference and substituted it with “…the inputs from those engaged in a rivalry with an assessee (Sir Dorabji Tata Trust) ought to have been considered by the department with a reasonable degree of circumspection and should not be placed on such a high pedestal so as to relegate all other material facts and accepted past assessment history of the case into insignificance”. However, there is no change in the outcome of the appeal, which upheld the tax exempt status of Sir Dorabji Tata Trust, clarified the ITAT.
Mistry’s office, while making a note of the rectification done by the ITAT on its own, said that “instead of seeking to blame the former Tata Sons chairman at every turn, the trustees of Tata Trusts must introspect why they have deviated from this path, leading to a greater scrutiny on their operations by the various government bodies”.
His office also said that even in 2013 (when Mistry was at the helm of Tata Sons), the Comptroller Auditor General of India (CAG) found irregularities of nearly Rs 1,000 crore in tax exemptions given to Tata Trusts. Mistry was removed from Tata Sons in October 2016.
“The trustees must introspect why in July 2018, the Public Accounts Committee, a parliamentary committee, expressed concern that public charitable trusts were being used to run businesses for profit and repeatedly violating rules. The CAG Report of 2019 records that the corpus funds of Trusts are being utilised to control the business of group companies instead of applying funds for charitable purposes.”
Mistry’s office further said, “While we all are extremely proud of the good work that has been done by Tata Trusts in the past, the question today is whether the decisions to deviate from the highest standards of governance imperils the largest public charitable trusts in India, and prevents benefits from reaching its rightful beneficiaries — the people of India.”

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