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Tata Trusts’ 2015 move to “surrender” registrations that gave them tax exemptions was “not voluntary”, the Income-Tax Department had told the Bombay High Court in August 2018. The department claimed that the trusts were “forced” to surrender the registrations after an I-T appellate authority

Tata Trusts’ 2015 move to “surrender” registrations that gave them tax exemptions was “not voluntary”, the Income-Tax Department had told the Bombay High Court in August 2018.

The department claimed that the trusts were “forced” to surrender the registrations after an I-T appellate authority order in March 2014 “established” tax violations by them.

The tax department’s submission in the court had come in response to a writ petition filed by one of the trusts, Jamsetji Tata Trust, which had challenged the department’s move to cancel the registrations, claiming that they had themselves surrendered the registrations in 2015.

Justifying its move to seek cancellation of registrations, the tax body had told the court that Tata Trusts “were left with no other option” but to surrender following the appellate authority’s ruling over various violations for the 2010-11 assessment year. ET has seen the department’s 2018 response, which has not come in the public domain so far.

In October 2019, the tax department cancelled registrations of six Tata Trusts — Jamsetji Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust and Navajbai Ratan Tata Trust.

Tata Trusts in a statement at the time said the cancellation order was “a culmination of the decision taken by these six trusts in 2015 to surrender, of their own volition, their registration under the I-T Act and to not claim the associated tax exemptions.” Tata Trusts had withdrawn the writ petition in the high court a year earlier, in October 2018.

The Income Tax Appellate Tribunal (ITAT) order, referred to by the I-T department in its response to the court, was passed on March 23, 2014. The department’s affidavit, filed by principal commissioner of income tax, Mumbai, Lekha Kumar, claimed that Jamsetji Tata Trust “itself agreed that decision to given up benefits was based on ITAT’s decision” in its case. “So, the surrender is not voluntary,” it said.

The government is considering a high-level committee’s recommendation on tax deduction on CSR funding and making non-compliance with CSR norms a civil offence, a senior Ministry of Corporate affairs (MCA) official said. The committee chaired by Corporate Affairs Ministry Secretary

The government is considering a high-level committee’s recommendation on tax deduction on CSR funding and making non-compliance with CSR norms a civil offence, a senior Ministry of Corporate affairs (MCA) official said.

The committee chaired by Corporate Affairs Ministry Secretary Injeti Srinivas in its report submitted on August 2019 has recommended that in case of violation of CSR provisions, penalty may be imposed instead of imprisonment.

In respect of tax benefit for CSR activities, the committee has recommended that all activities listed under Scheduled VII of the Companies Act, 2013 to enjoy uniform tax benefit and CSR expenditure to be made deductible from the income earned for the purpose of taxation.

“The Ministry of Corporate Affairs is considering these recommendations for implementation,” the official said.

During the monsoon session of Parliament, Minister of State for Finance and Corporate Affairs Ministry Anurag Singh Thakur had informed that the government was looking into the committee’s recommendations.

The committee has also suggested a provision to carry forward unspent CSR balance for three to five years.

According to the new CSR norms under Section 135 of the Companies Act, a company has to earmark a part of its profit for social activities and transfer all unspent amount to an escrow account if it is an ongoing project.

This account will be opened by the company concerned in a bank and be called the unspent corporate social responsibility account.

The CSR expenditure which remains unspent in three years would be transferred to any fund specified in Schedule VII of the Companies Act such as the Swachch Bharat Kosh, the Clean Ganga Fund, and the Prime Minister’s Relief Fund.

The central government funds should be discontinued as CSR spend, the committee report said and instead a special designated fund should be created for transfer of unspent CSR money beyond three to five years.

The committee has recommended that Schedule VII be aligned with the sustainable development goals to include sports promotion, senior citizens’ welfare, welfare of differently abled persons, disaster management, and heritage protection.

According to the government data, of the total 21,337 companies liable for CSR 9,753 companies did not report CSR activity in 2017-18.

The other recommendations of the committee include developing a CSR exchange portal to connect contributors, beneficiaries and agencies, allowing CSR in social benefit bonds and promoting social impact companies.

The committee constituted in October, 2018 has among its members N Chandrasekaran, chairman, Tata Sons, and Amit Chandra, managing director, Bain Capital Private Equity, among others.

The government on Tuesday informed Parliament that it has so far given permission to prosecute in 366 cases related to CSR related offences. “So far, sanction for prosecution has been accorded in 366 cases. All CSR related offences are compoundable

The government on Tuesday informed Parliament that it has so far given permission to prosecute in 366 cases related to CSR related offences.

“So far, sanction for prosecution has been accorded in 366 cases. All CSR related offences are compoundable. So far, 118 applications for compounding have been made and 37 cases have been compounded,” Minister of State for Finance and Corporate Affairs Anurag Singh Thakur said in a written reply to the Rajya Sabha on December 10.

Whenever any violation of the CSR provisions is reported, action against such non-compliant companies are initiated as per provisions of Companies Act, 2013 after due examination of records, he added.

The Minister further said that there was no proposal under consideration to incentivise companies for CSR investment in areas like education and health care.

He was responding to queries raised by JD(U) member M P Veerendra Kumar who had also asked if the government has constituted a monitoring committee to oversee the CSR spending of the companies.

The Minister said the CSR is a Board driven process and the Board of the company is empowered to decide the activities to be undertaken as per Schedule VII of the Companies Act, 2013 taking into consideration the recommendation of its CSR committee.

The entire CSR architecture is disclosure based and CSR mandated companies are required to file details of CSR amount spent annually in MCA21 registry, he added.