BMW import case: HC rules in favour of Shah Rukh Khan

According to the ITAT’s order of July 23,2009,Khan was entitled to the depreciation under section II (d) of the Income Tax Rules,1962,that was inserted by the IT Department from April 1,2002. According to the depreciation table in the rules,commercial vehicles which included light motor vehicles were entitled to 50 per cent depreciation. The section stated that vehicles purchased between April 1,2001 and April 1,2002 were entitled to the depreciation.

The High Court observed that as defined in the rules,light motor vehicles include motor cars that weigh less than 7,500 kg that covers Khan’s high-end four-wheeler. “Does it fall within the definition? If it does then where is the question (of challenge)?” Justice Devadhar asked the IT department.

Khan has been at loggerheads with the IT Department since he first sought 50 per cent depreciation during the assessment year of 2002-03. The officer concerned rejected the demand and had said that Khan was entitled to only 20 per cent as 50 per cent was only for commercial vehicles. The assessment officer’s finding was upheld by the Commissioner of Income Tax (Appeals) in 2005. However,when Khan challenged the decision in the ITAT,it was overturned in his favour. The HC also agreed with the finding of the tribunal that Khan used his membership to the Otters Club for professional reasons. The tribunal had observed that Khan was a member of other clubs but had acquired the Otters Club membership for professional reasons.