The tax authority issues a corrigendum stating: “Critical comments were due to a typo”.
In an unprecedented move, Mumbai Bank’s Income Tax Appellate Tribunal (ITAT) has withdrawn the critical remarks it made in its latest decision on Cyrus Mistry, which restored tax-exempt status to the three main Tata Trusts.
In a great moral victory for the former Tata Group chairman, who was unceremoniously sacked on October 24, 2016, the tribunal on Wednesday issued a correction to its December 28 ruling that said, “The critical remarks were up attributed to a typo. “
Corrigendum by the President of the Tribunal PP Bhatt and Vice-President Pramod Kumar clarifies that the first order contained certain “accidental references to Mistry due to some typographical errors”. Also, observations on Mr. Mistry state that one fact that was inadvertently overlooked was that the information provided by Mr. Mistry was due to a communication from the evaluator.
It goes on to state: “The above corrections have no effect on the outcome of the complaint and the outcome of the complaint remains the same.” The Mistry family welcomed suo motu’s withdrawal and said the immediate correction of wild allegations in ITAT- Order is a confirmation of truth and justice.
“We note that the Income Tax Appellate Tribunal itself issued a corrigendum to correct the wild personal allegations made against Mr Mistry, which formed part of its December 28 ruling, in proceedings that Mr Mistry was not even a party to . “told the Mistry family PTI.
According to the tribunal, the error occurred in the two-page correction because paragraph 37 had to be numbered 47 in the first order on page 60. Accordingly, paragraph 37 is now replaced by 47 and all remaining paragraphs are renumbered 48 to 67 instead of 38 to 57.
The Tribunal also said, “There were some accidental errors in the Dec. 28 order… On pages 60-61, certain comments were made about Mr. Mistry. One fact that was accidentally overlooked was that the information Mistry provided was in response to a communication from the assessor.
“In these circumstances, the comments made in Clause 38, now renumbered in Clause 48 due to a typographical error, will be amended to replace the following:” Clause 48. It is known that Mr. Mistry, a former chairman of the Tata Group, was announced on Removed from his position in the Tata Group on October 24, 2016. Within eight weeks of its removal, it will send this material to the appraiser in response to a communication against the Tata Group trusts, including the appraiser before us. “
“The contributions of individuals who have rivaled a evaluator should have been given reasonable consideration by the division and should not be placed on such a high pedestal that all other material facts and accepted past evaluation history are deprecated by the Fall into insignificance, “says the Corrigendum.
The Mistry family further said, “The reversal of comments confirms that the information sent by Mistry to the Assistant Commissioner for Income Taxes responded to specific subpoenas under Section 133 (6) of the Income Tax Act that are expected of any law abiding person”.
As a director of Tata Sons, Mr. Mistry’s response to the subpoena was required by law and fully complied with the Tata Sons bylaws. More importantly, he was keeping his fiduciary duties as a director, according to the Mistrys.
Mr. Mistry noted that Tata Trusts are not for profit charitable foundations, and not a family investment firm. Rather than wanting to blame him every step of the way, the trustees need to investigate why they deviated from their predetermined path of philanthropy, which has led to closer scrutiny of their operations by various government agencies.
Trustees also need to review why Parliament’s Audit Committee in July 2018 expressed concern that these trusts were being used to run businesses for profit, in repeated breach of provisions of the Income Tax Act.
Similarly, the CAG had stated in its 2019 report that the corpus of the Tata Trusts had been used to control group companies for charitable purposes instead.
The trustees should also think about why they continued to donate millions of dollars to wealthy overseas universities, and worse, if one of the trustees had an association rather than using the tax-exempt money to develop educational institutions in our country, as was done by the Trusts mandatory.
It is known that as early as 2013, the CAG found irregularities in the income tax exemption for the Tata Trusts amounting to nearly 1,000 crore, the statement said.
On December 28, the tribunal confirming the tax exemption status of Ratan Tata Trust, JRD Tata Trust and Dorabji Tata Trust, which together own 66% of the Tata Sons, announced that IT would lift the tax exemption for these trusts in March 2019 was “without legally sustainable merit”.
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