 "CAG pulls up I-T dept for giving irregular tax exemptions to Tata trusts")
Government auditor CAG on Friday pulled up the Income Tax Department (ITD) for allowing irregular tax exemption to two Tata trusts involving tax implication of over Rs 1,000 crore.
“ITD allowed irregular exemptions to Jamshetji Tata Trust and Navajbai Ratan Tata Trust who invested Rs 3,139 crore in prohibited modes arising from accumulation of capital gains which involved tax effect of Rs 1066.95 crore,” said the CAG report tabled in Parliament.
The Comptroller and Auditor General (CAG) has noticed 14 Trust cases involving tax liability of Rs 1090.03 crore, wherein accumulation arising from capital gains was either not invested in the specified mode or computed incorrectly. Moreover, the CAG added, in some cases “they did not fully utilised … proceeds for acquiring capital assets. The ITD allowed exemption irregularly in these assessments completed after scrutiny”.
[caption id=“attachment_1260775” align=“alignleft” width=“380”]  Reuters[/caption]
Referring to a particular case, the auditor said Jamshetji Tata Trust and Navajbai Ratan Tata Trust earned Rs 1,905 crore and Rs 1234 crore on account of capital gains during assessment years 2008-09 and 2009-10, respectively and “invested the same in prohibited mode of investment which is in contravention to the provisions of section 13 (1) (d) of the Income Tax Act (dealing with investment)”.
The assessing officer should have brought the investment aggregating Rs 3139 crore to tax at maximum marginal rate under the Income Tax Act, CAG said adding, “it resulted in short levy of tax of Rs 1,066.95 crore”. The report noted that Finance Ministry had accepted the audit observation and initiated remedial action.
The CAG, it said, is of the view that the Ministry should ensure that such mistakes do no reoccur. It also suggested that the Ministry should “evolve effective monitoring system to make AOs (assessing officers) responsible to check investments in authorised modes in the all the cases”.
Impact Shorts
More ShortsPTI
 "Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?")
 "As Russia pushes east, Ukraine faces mounting pressure to defend its heartland")
 "Why Mossad was not on board with Israel’s strike on Hamas in Qatar")
 "Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe")
 "Russian drones over Poland: Trump’s tepid reaction a wake-up call for Nato?")
 "As Russia pushes east, Ukraine faces mounting pressure to defend its heartland")
 "Why Mossad was not on board with Israel’s strike on Hamas in Qatar")
 "Turkey: Erdogan's police arrest opposition mayor Hasan Mutlu, dozens officials in corruption probe")
](https://images.firstpost.com/wp-content/uploads/2013/12/TatamotorsfromReuters.jpg){kind=link}