Summary
- The ITAT Mumbai has ruled that the Navajbhai Ratan Tata Trust's investment in Tata Sons Ltd. does not violate Section 13(2)(h) of the Income-tax Act, 1961, allowing the trust to retain its charitable exemption.
- The Tribunal found that founder trustee Ratan N. Tata held only 0.83% of voting power, significantly below the 20% threshold required for "substantial interest."
- It also clarified that any denial of Section 11 exemptions due to investment violations applies only to income from prohibited investments, not the trust's entire income.
- This decision could set a precedent for similar cases involving charitable trusts and their investment activities.
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