This story is from September 12, 2020

Rs 3.5 crore evasion: I-T case against AR Rahman

The income tax department has dragged Oscar-winning music composer A R Rahman to court saying he had ‘siphoned of’ Rs 3.5 crore by routing it through A R Rahman Foundation, a charitable trust managed by him. Admitting an appeal filed by the department, a bench of Justice TS Sivagnanam and Justice V Bhavani Subbaroyan of the Madras high court asked the composer to file a response in three weeks.
Rs 3.5 crore evasion: I-T case against AR Rahman
AR Rahman
CHENNAI: The income tax department has dragged Oscar-winning music composer A R Rahman to court saying he had ‘siphoned of’ Rs 3.5 crore by routing it through A R Rahman Foundation, a charitable trust managed by him. Admitting an appeal filed by the department, a bench of Justice TS Sivagnanam and Justice V Bhavani Subbaroyan of the Madras high court asked the composer to file a response in three weeks.
According to T R Senthil Kumar, senior standing counsel for I-T, Rahman had filed his tax return for 2011-12 showing an income of Rs 15.98 crore.
The return was processed, and the assessment was completed on March 30, 2014.
Thereafter, the assessment was reopened as it was found that he had received Rs 80 lakh as advisory charges from Photon Kaltas Production Pvt Ltd after TDS deduction in the professional receipts which had escaped the income.
However, based on the explanation made by Rahman that the amount has been taxed as an anonymous donation received by A R Rahman Foundation, for which Rahman is the managing trustee, the assessment officer closed the assessment.
It is a fact that Rahman had entered into a three-year contract with UK-based mobile company Lebara Mobile for composing exclusive ringtones. Lebara has agreed to sponsor Rahman’s UK tour and pay a fee for every download of i-tunes for three years, I-T department said
For such services rendered, Rahman has received US $ 7,50,000 (Rs 3.47 crore) from Lebara during the financial year 2010-11. Since the remuneration was paid for Rahman for the services he rendered in his individual capacity as an artist the same must have been considered for taxation under Rahman’s account but the same has been directly transferred to the foundation’s account as donation, the department said.

“The income, which is taxable, must be received by Rahman and after due deduction of tax it can be transferred to the trust. But the same cannot be routed through the trust as income to the charitable trust. Donation to trusts must be voluntary and such direct transfer of his income to the trust is not permissible under law,” Senthil Kumar said.
Taking note of the same the principal commissioner of income tax set aside the order of the assessment officer and once again reopened the assessment.
Aggrieved, Rahman moved an appeal against the order which was allowed by the income tax tribunal. Now, challenging the decision of the tribunal, the department has approached the high court.
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