Madras Excessive Court docket discover to A R Rahman over tax division’s plea. (Representational)
Chennai:
The Madras Excessive Court docket on Friday issued discover to music composer A R Rahman on a petition filed by the Earnings Tax division alleging that he used a basis during which he’s the managing trustee as a conduit to evade tax and routed Rs three crore plus earnings to it.
The Earnings Tax Division moved the Excessive Court docket difficult the ruling of the Earnings Tax Appellate Tribunal in Chennai that put aside the order of the Principal Commissioner of Earnings Tax in Chennai.
A division bench of justices TS Sivagnanam and V Bhavani Subbaroyan recorded the submissions made by the IT division and issued discover to the music composer.
Based on senior standing counsel for the Earnings Tax division T R Senthil Kumar, within the evaluation yr 2011-12, Mr Rahman acquired earnings to the tune of Rs 3.47 crore in reference to an settlement made with the UK-based Libra Mobiles.
The contract was to compose unique ringtones for the corporate and the time period of the contract was for 3 years.
As per the contract, Mr Rahman instructed the corporate to pay his remuneration on to the muse managed by him, the division stated.
“The taxable earnings should be acquired by Mr Rahman and after due deduction of tax, it may be transferred to the belief. However the identical can’t be routed by way of the belief as earnings to the charitable belief is exempted beneath the Earnings Tax Act,” the counsel stated.
Based on the petition filed by the Earnings Tax division, Mr Rahman after receiving the IT discover had moved the Earnings Tax Appellate Tribunal in Chennai and the tribunal in September 2019 had held that the federal government of India had
accorded “put up facto approval” with respect to this contribution.
The tribunal dominated in favour of Rahman discovering that the quantity was not taxable.
The petition stated the order of the appellate tribunal is “misguided in regulation” and against info and circumstances of the case.
Mr Rahman had acquired Rs 3,47,77,200 from Libra Cell throughout 2010-11 in his particular person capability as an artiste which will need to have been thought of for taxation and this was not thought of by the Assessing Officer within the reassessment order.
The receipts by the belief are skilled charges paid to the assessee for the companies rendered by him.
Nevertheless, the assessee has not admitted these skilled receipts in his return of earnings for the evaluation yr 2011-12.
As an alternative of receiving the consideration as skilled expenses in his particular person capability, the assessee has acquired these funds diverted to A R Rahman Basis which is registered as a tax-exempt entity beneath the Earnings Tax Act, the plea stated.
The quantity that will need to have been acquired by Mr Rahman as skilled price has been handed off as “donation” to the muse.
The tribunal failed to contemplate that the assessee who can also be the managing trustee of A R Rahman Basis has used it as a “conduit” for accounting his personal untaxed earnings, the plea stated.
The Assessing Officer had not made any try to look at the assorted clauses of settlement nor tried to make enquiry to determine info.
Additionally, the AO didn’t collect any materials in the course of the course of reassessment proceedings to come back to the exact same conclusion arrived at in the course of the unique evaluation, the plea added.
In an announcement to PTI, Mr Rahman’s administration quoted the tribunal’s ruling within the musician’s favour.
“The receipt of funds within the present matter has already been supplied to tax within the arms of the AR Rahman Basis which was appreciated by the Honorable Earnings Tax Appellate Tribunal, Chennai Bench whereas it adjudicated the matter in favour of Mr AR Rahman. We’ll proceed to supply our full help and cooperation. Could justice prevail,” the assertion learn.
Mr Rahman’s administration stated the muse was established in 2006 with a imaginative and prescient to empower the underserved sections of society by way of schooling, unity, humanity and management.
“Within the final 14 years, we have now positively impacted the lives of scholars, retired musicians and people affected by Chennai floods and extra lately, the COVID-19 pandemic,” the assertion learn.
(Apart from the headline, this story has not been edited by NDTV employees and is revealed from a syndicated feed.)
