The Income Tax Appellate Tribunal (ITAT) has ruled that the withdrawal of income tax exemption to Young Indian, an entity controlled by Congress president Sonia Gandhi, her family and others, by the tax department is correct and it cannot be called a charitable organisation.
An appeal to restore the exemption from income tax was made by Young Indian before the ITAT.
The Delhi bench of the ITAT, in an order on November 15, said Young Indian's "entire move for acquiring the AJL (Associated Journals Ltd), which had stopped/suspended its publication activities and was holding large number of properties worth hundreds of crores with huge rental and lease income, was for acquiring control and interest in such properties for mere sum of Rs 50 lakh".
"Can prudence justify such acquisition was for furtherance of charity or for furtherance of the objects of the Young Indian?" it said.
The order further stated that in view of their findings, "We hold that the CIT-E (commissioner of income tax for exemption) was justified in cancelling the registration from the assessment year 2011-12, because none of the activities of the assessee (Young Indian) was carried out in accordance with its objects nor its activities can be held to be genuine."
"Consequently, the appeal of the assessee is dismissed," it said upholding the tax department's order.
The shareholders of Young Indian during the said assessment year were Sonia Gandhi, Rahul Gandhi, Congress leaders Moti Lal Vora, Oscar Fernandes, Sam Pitroda and Suman Dubey.
The ITAT is the first appellate mechanism against an order of the taxman and an assessee can further appeal their case before a high court or the Supreme Court.