Friction # 15: Tata trusts in clean-up mode, aim to leave past behind

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Editor's note: Significant, company-defining things are taking place at the Tata group. I want to talk about that today.  Despite its image as one of the shining beacons of an ethical corporate enterprise, if you look closely, a regulatory overhang has dogged the Tata group for over four years now. Be it over allegations of its corporate governance standards, the tax exemptions enjoyed by the Tata trusts, or an investigation against a former managing trustee. To top it all, there is also the ongoing legal battle with investment firms owned by former group chairman Cyrus Mistry.  Six Tata trusts had lost their charitable status as they held equity shares as part of their corpus. The Income Tax Act was amended in 2014, rendering the trusts non-compliant for tax exemption purposes on account of their ownership of these assets. In 2015, these trusts surrendered their licences, but the tax department did not take cognisance of the surrender and cancelled their registration in October 2019. The Tata trusts have appealed against this order and a verdict is awaited from the income tax appellate tribunal …