The Revenue-Tax Appellate Tribunal (ITAT) on Friday, in a setback to the I-T section, allowed tax exemption of around Rs 220 crore to a Tata Believe in entity, about donation to two US-primarily based universities in between assessment many years 2011-12 and 2012-13.

Earlier, the I-T department experienced slapped a Rs 100-crore tax demand on Tata Instruction and Progress Have faith in (TEDT) — which owns a majority share in Tata Sons.





The subject pertains to the exemption permitted by the Central Board of Direct Taxes (CBDT) on the Trust’s cumulative donation of over $100 million in the course of 2008-09 and 2015-16 to Cornell University and Harvard College — which also will involve design of a making named Tata Corridor.

The controversy began just after the Community Account Committee (PAC) of the Lok Sabha experienced, in 2018, sought enquiry in the issue as it thought that the exemption granted by the direct tax entire body was in violation of the I-T Act.

Concluding the matter, the ITAT stated that all other grounds of appeals would be “rendered, tutorial and infructuous. We have determined this issue in favour of the assessee, and thus permitted this ground of charm. We, hence, uphold the plea of the assessee, and delete the resultant disallowance of claim of exemption.”

Constituted in 2008, the TEDT experienced claimed exemption on international donations in AY2011-12 and 2012-13. The tax authorities denied exemption as the Have confidence in confirmed “nil income” all through the AYs, but claimed amounts remitted to these universities.

Tax authorities held that the total put in by the Believe in could not be taken care of as a permissible software of the trust’s income, and thus not qualified for exemption underneath the I-T charitable have confidence in provisions. The tax division finalised the assessment proceedings in March 2014, when it declined to grant exemption of income connected to the software of money outside the house India amounting to Rs 197.79 crore and Rs 25.37 crore, respectively.
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Even however the CBDT experienced, in November 2015, granted specific acceptance to the very same, the CIT (Appeals) upheld the tax office order, declaring the CBDT order was not retrospective in mother nature and as a result could not use to AY2011-12 and 2012-2013, for which the exemption was sought.

Aggrieved by the CIT (A), the Rely on moved the tribunal, hard the CIT (A) order, expressing the CBDT’s approval was powerful for the period of time covered by AY2009-10 by means of 2016-17.

The evaluating officer contesting the subject reproduced the CBDT’s previous remark in which the board turned down the Trust’s plea on grounds that the Trust was not advertising and marketing worldwide welfare in which India was interested.

Subsequently, even when the board authorised the plea, it mentioned that the approval was matter to verification by the evaluating officer.

“We are of the regarded as view that the discovered CIT(A) was in error whilst upholding the denial of claim of the assessee for exemption, in regard of the application of cash flow of the trust outside the house India… We may possibly, having said that, incorporate that this is exceptional scenario in which the CBDT authorized the exemption getting granted in regard of payment manufactured by the assessee trust… in which the evaluating officer has duly offered effect to the stand taken by the CBDT, which is still a hyper-pedantic — even if bonafide — solution of the acquired CIT(A), seemingly extra faithful to the CBDT than CBDT alone,” the tribunal stated. This kind of approach of the CIT(A) results in wholly avoidable litigation and diverts scarce resources of philanthropic bodies.

Macro degree perform carried out by these organisations should not be overshadowed by isolated predicaments like this. The tax administration really should be certain anyone in the loop is sufficiently sensitised and support produce a tax-friendly atmosphere and minimise litigation, it included.

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