I-T dept challenges clean chit to AR Rahman

Chennai

The Madras High Court on Friday ordered notice to Oscar award winning musician AR Rahman on a petition by the Income Tax Department challenging an order of the Income Tax Appellate Tribunal exonerating him in a case relating to assessment of declared income of Rs15.98 crore during the assessment year 2011-12.

The IT Dept submitted in September 2011, Rahman in his IT returns declared an income of over Rs15.98 crore. The same was accepted by the Assessment Officer in March 2014.

However, later the assessment was “reopened” under Section 148 of the IT Act citing that the composer had actually received Rs3.44 crore from Lebara Mobile, a United Kingdom based firm and Rs54 lakh from Photon Kathas Production Private Limited. But he had not brought this on record for assessment. In his defence, Rahman had argued Lebara Mobile had paid the money only to AR Rahman Foundation, which is into educating children from underprivileged background. The Foundation, he submitted, was an independent entity and the Ministry of Home Affairs had granted post-facto approval for the contribution. As a quid pro quo, he had agreed to compose ring tones for the British telecom company for free for three years.

Accepting this explanation, the Assessment Officer had closed the proceedings in March 2016. But in February 2018, the Principal Commissioner reopened the case and issued a showcause notice to the musician as to why the reassessment order should not be set aside as the remuneration was paid for his professional services.

On an application from Rahman, the Tribunal had overturned the action of the Principal Commissioner.

Challenging this the IT Dept has moved HC contending it would have had no objection to the transaction had Rahman paid tax on it and transferred the money to his Foundation.

There was evidence to prove the money was professional fees. The teleco had sponsored Rahman’s trips to Britain. A division Bench of Justices TS Sivagnanam and V Bhavani Subbaroyan then ordered notice to the composer.

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