Income tax dept moves Madras HC against AR Rahman for alleged tax evasion

The Income Tax department has moved the Madras High Court against Academy award-winning music composer AR Rahman. The department has alleged that the artist has transferred his income of Rs 3.47 crore to a charitable trust managed by him in order to evade paying taxes, reports  Times of India. 

The IT department reportedly found discrepancies in the composer’s tax filing for the fiscal year 2011-12. Thereafter, a division bench of Justice TS Sivagnanam and Justice V Bhavani Subbaroyan issued a notice to Rahman asking him to explain the charges leveled against him.

According to TR Senthil Kumar, a senior standing counsel for the Income Tax department, Rahman had allegedly received an income of Rs 3.47 crore from a United Kingdom-based company in the assessment year of 2011-12. Libra Mobiles had a three-year contract with Rahman during which he was to compose exclusive ringtones for the firm.

The counsel alleged that the 53-year old composer had given instructions so that the payment is directly made to the account of his charitable trust ‘AR Rahman Foundation’.

“The income, which is taxable, must be received by Rahman,” Kumar told Times of India. He said that only after the tax amount has been deducted from the payment, the rest can be transferred to the trust. “But the same cannot be routed through the trust as income to the charitable trust is exempted under the Income Tax Act.”

The News Minute reported that the case dates back to 2015 when the IT department had first accused the composer of evading taxes by routing payment. The report said that as the Foundation did not have a Foreign Contribution Regulation Act (FCRA) licence then, the amount was a taxable income and cannot be considered as foreign contributions or a donation amount.

Rahman had then moved the Income Tax Appellate Tribunal in Chennai against the department order and the tribunal had set aside the IT proceedings on the composer in September last year as there was “nothing on the record suggesting” that the amount was taxable.