The Income Tax department has alleged Oscar-winning music composer A R Rahman of routing income of over ₹3 crore through the A R Rahman Foundation, a charitable trust managed by him, to evade tax.
In this regard, the Income Tax department has moved to the Madras High Court and a division bench of Justice TS Sivagnanam and Justice V Bhavani Subbaroyan ordered notice to the music composer.
T R Senthil, senior standing counsel for the Income Tax department said, Rahman received an income of ₹3.47 crore in the assessment year 2011-12 when an agreement was made with UK-based Libra Mobiles.
Rahman was commissioned to compose exclusive ringtones for the company and the term of the contract was for three years. However, Rahman had inserted a clause wherein the company was asked to pay his remuneration directly to the foundation managed by him, the department said.
“The income, which is taxable, must be received by Rahman. 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 counsel said.
The IT department had moved to file an appeal in the Madras High Court after the proceeding initiated by it was set aside by the Income Tax tribunal.
Madras HC orders notice to AR Rahman after IT dept alleges tax evasion
