New Delhi: Government auditor CAG on Friday pulled up the income-tax department (I-T) for allowing irregular tax exemption to two Tata trusts involving tax implication of over Rs 1,000 crore.
“I-T department allowed irregular exemptions to Jamshetji Tata Trust and Navajbai Ratan Tata Trust, which have invested Rs 3,139 crore in prohibited modes arising from accumulation of capital gains which involved tax effect of Rs 1,066.95 crore,” said the CAG report tabled in Parliament.
The Comptroller and Auditor General (CAG) has noticed 14 Trust cases involving tax liability of Rs 1,090.03 crore, wherein accumulation arising from capital gains was either not invested in the specified mode or computed incorrectly.
Referring to a particular case, the auditor said Jamshetji Tata Trust and Navajbai Ratan Tata Trust earned Rs 1,905 crore and Rs 1,234 crore on account of capital gains during assessment years 2008-09 and 2009-10, respectively and “invested the same in prohibited mode of investment.
The assessing officer should have brought the investment aggregating Rs 3,139 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 suggested a monitoring system to make assessing officers responsible to check investments.”
