| Chennai |
September 12, 2020 12:20:57 am
The Income Tax Department on Friday moved a petition in Madras High Court accusing Oscar-winning music composer A R Rahman of evading tax by allegedly routing income through his non-profit organisation, A R Rahman Foundation.
Admitting the appeal, a High Court division bench of Justices T S Sivagnanam and V Bhavani Subbaroyan ordered a notice to be issued to Rahman.
In the petition, the I-T Department has asked whether the composer was using A R Rahman Foundation as a “conduit for accounting his own untaxed income, and as a tool for siphoning his funds”. The petition alleges that Rahman had routed income of Rs 3.47 crore through the Foundation, a registered charitable trust that he directly manages.
Money paid to the organisation is not taxable, as it is a charitable trust.
The department moved the court after I-T Tribunal earlier set aside proceedings initiated against Rahman.
Rahman’s legal counsels will next reply to the notice in court.
The I-T Department’s counsel, T R Senthil Kumar, told the court that Rahman received income of Rs 3.47 crore in assessment year 2011-12 in connection with an agreement with UK-based company Libra Mobiles. The department has stated that Rahman asked the company to pay his remuneration directly to his foundation. His three-year contract with Libra Mobiles constituted composing exclusive cellphone ringtones.
Arguing that the income that was taxable must have been received by Rahman himself, Senthil Kumar submitted that Rahman could have transferred the amount to the trust after deducting income tax. But, the counsel submitted, the amount was routed through A R Rahman Foundation, which was exempted from paying tax under the Income Tax Act as a charitable trust.
According to the petition, the I-T Tribunal had “failed” to consider the fact that Rahman had received the amount in his individual capacity, and that he did not submit these professional receipts in his income tax return for assessment year 2011-12.
The petition appeals to the court to decide “whether the appellate is right in law in not taking into cognisance that the assessee is the managing trustee of A R Rahman Foundation, and has used the Foundation as a conduit for accounting his own untaxed income and as a tool for siphoning his funds”.
According to the petition, after receiving the I-T notice Rahman had moved the Income Tax Appellate Tribunal in Chennai. In September 2019, the tribunal held that the Union government had accorded “post facto approval” with respect to this contribution. The Tribunal ruled in favour of Rahman finding that the amount was not taxable.
The petition said the order of the Tribunal is “erroneous in law” and opposed to facts and circumstances of the case. The assessing officer (AO), it stated, had not made any attempt to examine the various clauses of agreement nor tried to make enquiry to ascertain facts. Also, the AO did not gather any material during the course of reassessment proceedings to come to the same conclusion arrived at during the original assessment.
-With PTI inputs
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