On Friday, the Madras HC issued notice to music composer A R Rahman on a petition filed by the Income Tax Department, charging him of misusing his position as a trustee in a foundation to evade tax. The petition was filed challenging the Income Tax Appellate Tribunal’s order, which discredited the findings of the principal commissioner of income tax, setting aside the charges against the Oscar-winning musician. The Appellate Tribunal’s ruling was described as “erroneous” and contradictory to the facts and circumstances of the case.

The original case dates back to an allegation that A R Rahman had received income of about Rs.3.47 crores through an agreement in which he composed exclusive ringtones for UK based Libra-Mobiles in the assessment year 2012. Rahman allegedly instructed the company to credit the money directly to the foundation, in which he served as a trustee. As income to a charitable trust is exempted under the Income Tax Act, routing the money through the fund facilitated tax evasion. Immediately after the Principal Commissioner of Income Tax issued a show-cause notice against Rahman, exercising the power of revision vested in him under Section 263 of the IT Act, Rahman approached the ITAT. The tribunal ruled in favour of him, finding that the amount was not taxable. It was held that the government had rendered post-facto approval for the contribution.

The fresh petition before the HC alleges that the remuneration amount was to be considered as payable to Rahman in his capacity as a professional music composer and hence must have been subjected to taxation.

Reported By : Lakshmi Raj C

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