ITAT rules in favour of Tata Education and Development Trust in Rs 220 crore tax case

The Income Tax Appellate Tribunal (ITAT) has ruled in favour of Tata Education and Development Trust in a case wherein the tax department had raised a demand of more than Rs 220 crore, an official statement said on Saturday.

The case pertains to assessment years 2011-12 and 2012-13 on money spent by the Trust for creating an endowment fund at Cornell University, US, to provide scholarships to Indian students and granting financial assistance to the Harvard Business School for constructing an executive building to be named Tata Hall.

It donated Rs 197.79 crore in 2011-12 and Rs 25.37 crore in 2012-13.

The controversy erupted after the Public Account Committee (PAC) of the Lok Sabha in 2018 sought an enquiry in the matter as it believed that exemption granted by the direct tax body was in violation of the I-T Act.

An official statement issued on Saturday said, "In a major relief for Tata Education and Development Trust, the Income Tax Appellate Tribunal (ITAT) bench consisting of Justice PP Bhatt, President, ITAT, on July 24, ruled in favour of the trust in their appeal against commissioner income tax (CIT) appeal order wherein a demand of more than Rs 220 crore was levied by the tax department."

The ITAT in its order on July 24 said that all other grounds of appeals will be "rendered, academic and infructuous".

"We have decided this issue in favour of the assessee and thus allowed this ground of appeal. We, therefore, uphold the plea of the assessee and delete the resultant disallowance of claim of exemption," it said.

The Appellate Tribunal also stated in its order that "this wholly avoidable litigation which does not only clog the serious litigation before the judicial forums but also diverts scarce resources of the philanthropic bodies, like the assessee before us, to the areas which do no good to the society at large".  The Tribunal hoped that the admirable work being done by the Government of India, in pursuing such forward looking policies at the macro level, is not allowed to be overshadowed by the isolated situations like this, at the field level, which must be minimised by sensitising the authorities concerned.

"An effort should be made to create a taxpayer friendly atmosphere by adopting just and fair approach at every level of the tax administration," the ITAT said.