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HomeEconomyTata Trusts accused of favouring Harvard over 'under-privileged' Indian universities

Tata Trusts accused of favouring Harvard over ‘under-privileged’ Indian universities

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Tata Trusts defends $50 million donation, says no laws violated. Establishment of Tata Hall at Harvard will help more Indians study there, it says.

New Delhi: A parliamentary committee has taken exception to a donation of $50 million (Rs 325 crore) by the Tata Trusts for an academic and residential building at Harvard Business School (HBS) in Boston, USA.

The panel, ThePrint has learnt, has questioned the “justification” of spending what it says is public charity money on foreign universities when under-privileged students of Indian institutions such as the Tata Institute of Social Sciences (TISS) are protesting against the lack of funds and scholarships.

According to two MPs who are on the Public Accounts Committee (PAC)’s sub-committee on direct and indirect tax, the panel has alleged that trusts and charitable institutions in general are committing “blatant tax violations”.

It has proposed the constitution of an experts group under the income tax department to “look into the violations committed by Tata Trusts afresh”, and to devise a procedure for proper and systematic evaluation of such trusts.

The sub-committee is headed by BJP MP Nishikant Dubey, and its members include BJP MPs Bhupender Yadav and Shivkumar Udasi, among others. Its recommendations are not binding on the government, though.

Tata Trusts has vehemently denied allegations of tax violations and misuse of exemptions. “There are no violations by Tata Trusts, either in supporting educational and research activities in overseas institutions, in IT compliances, or in the Trusts’ investments,” it said in a detailed response to queries from ThePrint.

It said that the support for the establishment of Tata Hall at HBS was in recognition of its direct contribution to India. In the last decade alone, HBS has educated more than 400 MBAs and over 2,200 executives and senior government leaders from India, it added.

What is Tata Trusts? 

One of India’s oldest philanthropic entities, Tata Trusts own two-thirds of the stock holding of Tata Sons – the promoter and a significant shareholder of Tata group companies. The charitable organisation had, in 2010, donated $50 million for a 150,000 sq ft building named Tata Hall in honour of former Tata Group chairman Ratan Tata.

Ratan Tata is an investor in ThePrint.

The alleged violation

In a report that is likely to be placed before the Lok Sabha Speaker shortly, the sub-committee has observed that in June 2014, the Central Board of Direct Taxes (CBDT) had rejected the application for tax exemption of such foreign donations on the grounds that there was no international welfare in which India was interested.

However, the same was reversed with retrospective effect in November 2015 “without assigning any reason”, says the report. The two MPs privy to the deliberations of the panel that adopted the report last Thursday told ThePrint that the sub-committee also criticised the income tax department for making “no effort” to monitor the trusts, and ensure that there is no abuse of concessions.

Citing documents provided by the CBDT, the sub-committee has claimed that the construction of Tata Hall at HBS “did not amount either to charity or international welfare in which India was interested”. Instead, it was for the “promotion of personal interest of one/some of the trustees” of various Tata trusts.

“The funds for the said donations were received from group companies and other Tata Trusts. The group companies sponsoring such grants to HBS for Tata Hall claimed it as business promotion expenses, as can be seen from their annual accounts (e.g. accounts of M/s Tata Motors Ltd for 2010-11)… The purposes for which the donation was made did not match with the objects of the trust,” one MP quoted the report as stating.

The panel has also “desired” the office of the Comptroller & Auditor General of India submit a report on what it alleges are violations of the Income Tax Act by charitable trusts, and make recommendations on how to plug the gaps.

‘More Indians at Harvard’

Tata Trusts, in its response to queries from ThePrint, said its contribution would help more Indians to study at HBS and in turn boost economic activity in India.

“The world class management thinking of HBS also positively impacts India through international companies participating in the Indian economy. With the additional infrastructure in the Tata Hall, there is now scope for many more leaders to attend HBS’s Executive Education Programme, which will allow even better leadership impact in every field of economic activity in India,” it said.

Similarly, the Trusts’ support to the Centre of Genetics and Society at the University of California, San Diego, or the Tata MIT Centre, or the Tata Centre at Chicago University, are aimed at leveraging or developing technological solutions to solve socio-economic issues for the benefit of India.

“We are proud that internationally renowned knowledge centres have agreed to partner an Indian organisation to address causes that impact society at large,” Tata Trusts said.

The panel report, says an MP familiar with its contents, also claims that tax-exempt public charity money is being funnelled outside the country by the Tata Educational and Development Trust to fund rich foreign universities, “as opposed to being used for the benefit of the people of our country”.

Rebutting the allegation, Tata Trusts said: “The contributions to overseas educational institutions by the Trusts are completely aligned with the charitable mandate of the Trusts and have qualified for tax exemption by the income tax authorities under the prevailing laws. This support is an extension of Tata Trusts’ role in nation building.”

Tata Trusts’ history with institutions 

It needs to be noted that institutions like the Tata Institute of Social Sciences (TISS; founded in 1936 with the assistance of the 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”.

They were all subsequently taken over by the government of India and operate under its overall superintendence, guidance and control. The Tata Trusts continue to support these institutions financially and otherwise through a number of initiatives, the Trusts added.

“In addition to these, it also needs to be noted that the development of education in India is a prime objective of the Trusts, and the Trusts have historically devoted support to the cause. In 2016-17 alone, the Trusts disbursed about Rs 125 crore for the development of education in India,” the Trusts said.

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  1. Absolutely!
    This will acually provide access to Indian students. They will in turn return to India halt some braindrain.
    We need more India students being educated at HBS and in Indian Universities. Tata Trusts Does both.
    This is a classic example of paying it forwatd for the Indian people. The more people get to know and understand the Indian multi-faceted culture through exposure at HBS the greater support will return to India in kind.
    If you know Tata you will see this as another patient investment for the betterment of the Indian people. Make no
    mistake and set your mind at ease.

  2. An unnecessary, small hearted, jingoistic controversy. Tatas and Harvard are both above board, in every sense of the term. It is a fair observation that Indian universities are in greater need of funds than Harvard or Yale, which have enormous endowments. However, this act of philanthropy builds up the image of both the Tata group, which Shri Ratan Tata helmed with distinction for a long time, and India. A lot of revenue for the group comes from international operations. TCS must have earnd many multiples of $ 50 million in profits from the United States.

    • I fully agree with Ashok’s comments and views. Today’s business is boundaryless; perhaps, Tatas earn more profits from their overesas ventures and activities than India now. hence, it is thoroughly justified for teh Tata Trust to donate or support such accademic activities, if not for anything but building the image and brand for India. India should be thankful to Tatas for their such excellent global contribution. Let the Govt and I-T keep their hands off , and try to malign the Tata Trust.

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