Panel of MPs raise red flag over Tata Trusts funding of Harvard Business School, Cornell projects

The funding by TEDT was made in eight tranches between FY10 and FY17 and was also used to construct a building named “Tata Hall” in Harvard Business School.

“It is seen that tax exempted public charity money is being funnelled outside the country to fund rich foreign universities by TEDT as opposed to being used for the benefit of the people of the country,” the report said.

According to the panel, construction of “Tata Hall” in Harvard did not amount to charity or international welfare in which India was interested.

The report said the exemption given by the Central Board of Direct Taxes (CBDT) to TEDT did not conform to Indian income tax laws.

“Given the repeated nature of these violations, these trusts (Tata Trust) do not meet the criteria for holding exemption under section 12 AA of the Income Tax Act,” report said.

The panel of parliamentarians called for probing alleged tax violations by the Tata Trusts.

“The committee, therefore desires that an expert group under the income tax department may be constituted to look in to violations committed by the Tata Trusts afresh, with a view to devising a procedure for proper and systematic evaluation of such trusts,” the report added.

Tata Trusts on its part has refuted the allegations made by the PAC of the Parliament.

In response to e-mailed queries sent by CNBC-TV18, a spokesperson of Tata Trusts said, “There are no violations by the Tata Trusts, either in their work, in income tax compliances or in the trusts' investments. All grants and project disbursements in India or overseas are in accordance with laws that prevail.”

The income tax department in their submission to the panel had also maintained that the overseas funding by TEDT conformed to Income Tax Act.

The Tata Trusts also maintained that it continues to support education sector in India.

“In the last two years itself, the trusts have disbursed over Rs 250 crore for the development of education in India,” the Tata Trusts said.

"It needs to be noted that institutions, like the Tata Institute of Social Sciences (TISS; founded in 1936 with assistance of University of Chicago), Tata Memorial Hospital (Mumbai; opened in 1941), the Indian Institute of Science (Bengaluru; founded in 1909), and the Tata Institute of Fundamental Research (Mumbai; founded in 1945), were all historically established by the trusts towards the cause of nation building," the Tata Trusts added.