Oscar-winning music composer AR Rahman has been surfaced with the fresh trouble from the Income Tax Department after the latter had moved to the Madras High Court on Friday accusing the musician of evading the tax by routing his income to the AR Rahman Foundation, the charitable trust that he founded.
According to the Income Tax Department, AR Rahman has received an income of around Rs 3.47 crore in the assessment year 2011-12 in connection with an agreement he made with the UK-based mobile company. The mobile firm has signed an agreement with the musician and the contract was to compose exclusive ringtones for the company and the term of the contract was for three years.
The IT department had said that the musician had instructed the company to pay his remuneration directly to his charitable foundation. The income that he received from the company as per the contract was taxable as per the act and it can't be routed through the trust as the income received by the charitable trust is exempted from paying the Income Tax under the IT Act.
The case dates back to 2015 during which the Income Tax department had accused the musician of evading tax through routing the income he received from the UK company to his trust. According to reports, his charitable trust hadn't acquired the licence under the Foreign Contribution Regulation Act (FCRA) to receive money from abroad during the time of transaction.
The Principal Commissioner of the Income Tax department in Chennai had said that the musician had diverted money to his foundation, that neither had a licence to receive money from abroad nor does the money fall under the category of donation to the trust. In connection to the tax evasion, the IT department had sent a notice to the composer, which he challenged in the Income Tax Appellate Tribunal in Chennai.
The IT Appellate Tribunal has, in September 2019, held that the government of India had accorded post-facto approval in respect of this contribution and there is nothing on the record that the income is taxable in the hands of the assessee, Rahman. The Income Tax department has now challenged the verdict of the IT Appellate Tribunal that kept aside the order that was passed by the Principal Commissioner of Income Tax in Chennai against the musician.
On Friday, the Income Tax department had moved to the Madras High Court against the tax evasion done by the musician and to challenge the verdict of the IT Appellate tribunal. Consenting the appeal of the IT department for hearing the matter, the High Court bench comprised of Justices TS Sivagnanam and V Bhavani Subbaroyan had directed to issue a notice to AR Rahman, as the court has initiated legal proceedings against the music composer.
AR Rahman and his family had founded the charitable trust, AR Rahman Foundation, in 2009 with the aim of helping children from underprivileged communities through music, education, and leadership building. The Central government has given the FCRA licence to the trust to receive donations from abroad in February 2020. According to reports, under the Foreign Contribution Regulation Act, the foundation of the oscar-winner has been registered for cultural, social, and educational purposes.