AR Rahman Embroiled In Income Tax Case; Madras High Court Sends Notice

An old income tax problem has resurfaced to nag music composer A R Rahman once again.

The Madras High Court has issued a notice to the maestro on an appeal made by the Principal Commissioner of Income Tax against the decision of the Income Tax Appellate Tribunal (ITAT) that went in favour of the music composer, reported News18.

What is the matter?

Assessment year 2011-12: Rahman declares in his return a total income of about Rs 15.98 crore

2014: The Income Tax Department accepts it

Reopened: IT Department says about Rs 54 lakh and Rs 3.47 crore received from Photon Kathas Production and the UK based Lebara Mobile was not assessed.

Rahman’s clarification: Rs 3.47 crore was paid by Lebara Mobile to AR Rahman Foundation (ARRF) and the entity was taxed separately. As Lebara Mobile contributed to the Foundation, he agreed to compose caller tunes for the company for three years.

2016: The IT Department accepts Rahman’s explanation and closes the reassessment in 2016.

2018: The Principal Commissioner asks Rahman why the 2016 reassessment order should not be set aside as the payment of Rs 3.47 crore was for the music composer’s professional service.

ITAT: The composer approaches the Tribunal, which rules in his favour saying the money was assessed in the hands of the Foundation. The Foundation had also got Home Ministry’s approval for the contribution made by Lebara Mobile.

The IT Department has now gone to the High Court against the ITAT order stating it would not have objected had the composer paid tax on the amount and transferred the sum to the Foundation, News18 reported.

The department contended that the money paid by the foreign company is for his professional service while the Foundation enjoys tax exemptions, the report further said.