The Income Tax Department has cancelled the registration of six Tata trusts through an order issued by the principal commissioner of income tax, Mumbai dated October 31.

The six trusts whose registrations were cancelled by the department are Jamsetji Tata Trust, RD Tata Trust, Tata Education Trust, Tata Social Welfare Trust, Sarvajanik Seva Trust and Navajbai Ratan Tata Trust.

In 2013, the CAG had pointed out that two of the six trusts had invested over Rs 3000 crores into some prohibited investment modes. CAG had also pointed out that the rates given to the said trusts led to losses to the department to the tune of Rs 1000 crores.

In 2015, Tata Trusts had moved to surrender the registrations of its six trusts under sections 12AA of the IT Act.

After the move by Tata Trusts to surrender their registrations, the Income Tax Department in July this year had served notices to the trusts seeking to reopen assessment regarding the said surrender of their registrations.

Meanwhile, Tata Trusts issued a statement in connection with the issue.

"The Trusts would like to clarify that this order of cancellation is a culmination of the decision taken by these six trusts in 2015 to surrender, of their own volition, their registration under the Income Tax Act and to not claim the associated income tax exemptions. The decision to surrender the registration (an option available in law) was taken in the best interests of the trust and to maximise the resources available to the trust for their charitable work which is the principal object and focus of the trusts.

"While the Tax Department’s order has cancelled the Trusts’ registration with immediate effect, we believe that as a matter of law and consistent with the department’s own decision in the past, the cancellation should take effect from 2015, when the registrations were surrendered and the trusts themselves consented to cancellation. The Trusts are examining the order and will take necessary next steps in accordance with the law. The trusts have effective legal options to vindicate their grievances against today’s order both factually and legally," the statement added.

Tata Trusts also clarified that they have not received any demand notice from the Income Tax Department pursuant to the cancellation order, as has been speculated in certain sections of the media.