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Probe Tata Trusts over tax 'violations', says Parliamentary panel

It also accused Tata Educational and Development Trust of 'funnelling' tax-exempt public charity money outside the country to fund rich foreign universities

Press Trust of India  |  New Delhi 

Probe Tata Trusts over tax 'violations', says Parliamentary panel

A parliamentary panel has recommended a probe into alleged tax violations by and has accused them of favouring foreign institutions like (HBS) over the Indian universities.

In the report, the sub-panel of the headed by Nishikant Dubey, flagged several alleged violations by

Asked for their comments, Tata Trusts, which are among the main promoters of over $100-billion Tata Group, countered all the charges and said they did not violate any Income Tax act compliance.

The parliamentary panel said, "At a time when underprivileged students of universities such as are protesting lack of basic funds and scholarships, it is difficult to comprehend the justification of spending million dollars of public charity money on foreign universities."

It also accused the of "funnelling" tax-exempt public charity money outside the country to fund rich foreign universities as opposed to being used for the benefit of the people of

The contribution to "was for the personal interest of one/some of the trustees of various Tata trusts", the panel said while specifically flagging a "gift agreement" of $50 million executed between the dean and industrialist

As per the agreement, in recognition of the generous support, a new building to be constructed on the campus would be named in the donor's name, the Tata Hall, it said.

"Thus, the funding to the (HBS) is neither charity nor in international welfare in which was interested," it said.

It also claimed that the trusts were investing money in prohibited modes of investment despite a law strictly prohibiting public charitable trusts from holding such assets post 1973.

The value of such investments ran into thousands of crores of rupees, it said.

"The committee is appalled to note that no action has been taken by the or the to remedy the situation," the panel said.

In the report, the panel also noted that had been claiming dividend income, which formed a majority of its income.

"This accumulation of funds as corpus, without applying towards charitable purposes is seemingly against the very spirit and objects of the trust itself," the panel said while adding that it is of the view that the trusts do not meet the criteria for holding exemption under the income tax act.

The committee has also demanded a probe into the "blatant tax violations" by the Tata Trusts.

"The committee, therefore, desires that an expert group under the may be constituted to look into the violations committed by Tata Trusts afresh with a view to devising a procedure for proper and systematic evaluation of such trusts..," it said in the report.

The Tata Trusts said, "There are no violations by Tata Trusts, either in supporting educational and research activities in overseas institutions, in IT compliances or in the trusts' investments."

They said they were proud that internationally renowned knowledge centres had agreed to partner with an Indian organisation to address causes that impact the society at large.

"The contributions to overseas educational institutions by the Trusts are completely aligned with the charitable mandate of the Trusts and have qualified for tax exemption by the Income tax authorities, under the prevailing laws," the statement said.

"There is no misuse of any tax exemptions by the Tata Trusts," it further said.

The Trusts' investments were governed by the Income Tax Act and the Maharashtra Public Trusts Act, 1950. All investments were in accordance with law, it added.

First Published: Tue, April 10 2018. 00:58 IST