Court issues notice to AR Rahman in tax evasion case

The matter pertains to the assessment year 2011-12.

The Madras High Court has issued a notice to A.R. Rahman 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 in a tax case.
The matter pertains to the assessment year 2011-12 and the declared income of Rs15.98 crore. Rahman had declared in his returns a total income of about Rs15.98 crore for assessment year 2011-12 and the same was accepted by the Income Tax Department in 2014.
However, the assessment was reopened stating that about Rs54 lakh and Rs3.47 crore received from Photon Kathas Production and the UK based Lebara Mobile were not assessed. Rahman had clarified that Rs3.47 crore was paid by Lebara Mobile to A.R. Rahman Foundation (ARRF) and the entity was taxed separately.
As Lebara Mobile contributed to the Foundation, Rahman agreed to compose caller tunes for the company for three years. The income tax department accepted Rahman's explanation and closed the reassessment in 2016.
But in 2018, the Principal Commissioner asked Rahman as to why the 2016 reassessment order should not be set aside as the payment of Rs3.47 crore was for the music composer's professional service. The composer approached the ITAT which ruled in favour of Rahman saying the said money was assessed in the hands of the Foundation. The Foundation had also got the Home Ministry's approval for the contribution made by Lebara Mobile.
The income tax department has 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. The department contended that the money paid by the foreign company is for his professional service while the Foundation enjoys tax exemptions.