The Income Tax Department has moved the Madras High Court against acclaimed music composer AR Rahman, alleging that he has routed his income of over Rs 3 crore through a charitable trust managed by him to evade paying taxes, The Times of India reported on Friday. The High Court has issued a notice to Rahman to explain the charges levelled against him.
TR Senthil Kumar, the senior standing counsel for the Income Tax department, alleged that Rahman had received an income of around Rs 3.47 crore from the United Kingdom’s Libra mobiles in the assessment year of 2011-’12. Under the three-year contract, Rahman was to compose exclusive ringtones for the company. Kumar alleged that the music composer had instructed the company to make the payment directly to his AR Rahman Foundation.
The department said that since the charitable trust did not have a licence under the Foreign Contribution Regulation Act at that time, the amount of Rs 3.47 crore was taxable income and cannot be considered as foreign contributions, according to The News Minute.
“The income, which is taxable, must be received by Rahman,” Kumar was quoted as saying by The Times of India. “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 is exempted under the Income Tax Act.”
The case dates back to 2015, when the Income Tax Department had first accused Rahman of tax evasion. The music composer had moved the Income Tax Appellate Tribunal in Chennai against the order. In September 2019, the tribunal had set aside the IT proceedings against Rahman and said there was “nothing on record” suggesting the money was taxable.
In February this year, the Centre granted the AR Rahman Foundation the FCRA license, according to The Hindu. The trust was registered as being for “cultural, social and educational purposes” under the FCRA.