Look into Tata Trusts: Par Panel

The Tata Educational and Development Trust was set up in 2008 with funds from other Tata Trusts and included a provision that allowed it to spend public charity money overseas, when the mandate of the original Tata Trusts was to spend the public charity m

New Delhi, July 19: The Income-Tax department should constitute an expert group to look into violations committed by Tata Trusts afresh, said a Parliamentary Panel report on exemptions given to charitable trusts and institutions.

The Public Accounts Committee headed by a senior Congress leader Mallikarjun Kharge also suggested that the Comptroller and Auditor General (CAG) should prepare a report on violations of the Public Charitable Trust and make recommendations to plug the gaps.

The committee in its report tabled in the Parliament on Thursday noted with concern that the Public Charitable Trusts are used to run commercially, for profit businesses, and have repeatedly violated provisions of the Income Tax Act.

“The Committee are again perturbed to find that Tata Trusts have been claiming dividend income which forms the majority of their income is exempt from the requirement of applying 85 per cent of Trust income towards charitable purposes,” the report said.

The value of these prohibited investments runs into thousands of crores, it said, adding, the panel is “appalled to note that no action has been taken by the Trustees or the Income Tax Department” to remedy the situation.

“The committee are aghast to note that the Trusts are investing money in prohibited modes of investments despite the law which strictly prohibiting Public Charitable Trusts from holding such assets post 1973,” it said.

“The committee therefore desires that an Expert Group under the Income Tax Department may be constituted to look into violation committed by Tata Trusts afresh with a view to devising a procedure for proper and systemic evaluation of such trusts so that these trusts do not escape the tax liability and the funds transferred out of country are used by these trusts in supplementing the work of the welfare of the people within India by catering their educational, medical, socio-economic and religious needs,” it said.

Observing that accumulation of funds by charitable trusts are against the very spirit and objects of the Trust itself, it said, it is also seen that “tax exempt public charity money is being funneled outside the country to fund rich foreign universities by the Tata Educational and Development Trust as opposed to being used for the benefits of the people of our country.” — PTI