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AR Rahman is accused by Income Tax dept of routing income to his foundation

AR Rahman has been alleged by the Income Tax department of routing his income of over Rs. 3 crores through the AR Rahman Foundation to evade tax.

On Friday, the IT department moved the Madras High Court against the renowned music composer AR Rahman, accusing him of routing his income through his foundation to evade tax.

The Chennai Principal Commissioner of Income Tax had alleged that the music composer had diverted money to his foundation. The department has reportedly reckoned the amount of income routed to about Rs 3 crore.

The Madras High Court on Friday sent a notice to AR Rahman to explain the charges directed by the Income Tax Department.

The case dates back to 2015 when the Income Tax Department had accused AR Rahman of evading tax. He has been alleged that money he received from a UK-based mobile phone company, for composing a ringtone for them.

The money had been transferred to the Foundation, which did not have a Foreign Contribution Regulation Act (FCRA) licence. The tax department had said that the amount of approximately Rs 3.47 crore was taxable income since the trust did not have permissions to receive foreign contributions, nor was the amount in the form of a donation. 

Rahman had moved the Income Tax Appellate Tribunal in Chennai against the I-T order. The tribunal had then held that the government of India, had granted “post facto approval” in respect of this contribution. “So, there is nothing on the record suggesting that it is taxable in the hands of the assessee (Rahman),” the court held in September 2019.

The Madras High Court had in February this year stayed an order by Commissioner of Goods and Service Tax and Central Excise. They accused the music composer of evading the tax to a tune of Rs 6.70 crore, from April 2013 and June 2017. The GST Council had accused the music composer of not paying the service tax on the payments that he had received for his work. 

AR Rahman, who is an Academy award winning music director, filed an affidavit in the court stating the Commissioner initiated action with the notion that producers are copyright owners of a song. However, composers are the copyright owners as per Section 13 (1) (a) of the Copyright Act 1957.


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