Cong's Young Indian not a charitable organisation, to lose tax exemption

The Income Tax Appellate Tribunal (ITAT) on Saturday (November 16) has ruled that the withdrawal of income tax exemption to Young Indian (YI), 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 withdrawal of 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 Associated Journals Ltd (AJL), which had stopped/suspended its publication activities 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 ₹50 lakh.”

“Can prudence justify such acquisition was for the furtherance of charity or for the 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.

Congress and BJP lock horns

After ITAT rejected Rahul Gandhi’s plea, the Congress during a press conference on Saturday said Prime Minister Narendra Modi and “his cronies” cannot change the inalienable truth.

Congress chief spokesperson Randeep Surjewala said, “What is subjudice need not be commented upon. It may look like a setback for certain news channels, to certain news channels, but, I can assure you, the majesty of law will prevail and the truth out in the open is that Young Indian is a not-for-profit company and neither Modi nor his cronies can change this inalienable truth.”

The BJP slammed the Gandhi family Congress leader Rahul Gandhi’s plea and accusing it of hiding the truth and indulging in corruption

At a press conference on Saturday, BJP leader and Law Minister Ravi Shankar Prasad alleged that the Congress’ ruling family amassed properties worth more than ₹2,000 crore through the investment of just ₹50 lakh in AJL and dubbed it as the “family model of development”.

“You hid the truth. When you applied to make it (Young Indian) a charitable institution in 2010, at that time you did not say that you have possession of property worth more than ₹2,000 crore in just ₹50 lakh,” said Prasad.

“The BJP condemns this palpable dubious transaction of undue enrichment. It is corruption. There is a judicial affirmation that family and commerce go hand in hand and you (family) invoke dubious methods for enrichment,” he added.

In July last year, the Income Tax department asked the YI to pay tax of around ₹145 crore.

“In ₹50 lakh, you became the owner of property worth ₹2,000 crore. What kind of model is this? This should be investigated,” Prasad told reporters.

“When BJP used to discuss Robert Vadra and his doings earlier, it used to say that there are various models of development – one of it is Vadra model of development. Under it (Vadra model of development), you invest ₹20-25 lakh, and you become the owner of big real estate properties in Gurgaon,” he added.

The minister said that after Vadra model of development, he used to think that a new model of development would not come.

“But this (Young Indian matter) is family model of development. Pariwar model of development. Invest ₹50 lakh and become the owner of property worth ₹2,000 crore,” Prasad said.

(With inputs from agencies)