Shah Rukh Khan exempted from paying Rs 10 crore tax after winning Income Tax case

Shah Rukh Khan was served the notice for avoiding taxes and was asked to shell out details about his investments in offshore destinations last year.

By: Express Web Desk | New Delhi | Published: March 23, 2017 1:07:23 pm
Shah Rukh Khan, Shah Rukh Khan income tax case, Shah Rukh Khan exempted from tax, Shah Rukh Khan kaun banega crorepati, shah rukh khan images Shah Rukh Khan might have to pay tax for his Dubai villas in India.

The Baadshah of Bollywood, Shah Rukh Khan, has got a reprieve after winning two Income Tax cases filed against him last year. The Income Tax Appellate Tribunal (ITAT) gave a decision in favour of the Raees actor. Shah Rukh was served a notice for avoiding taxes and was asked to provide details about his investments in foreign destinations such as Bermuda, Dubai and British Virgin Islands (BVI). Now, in its decision, ITAT allowed SRK a deduction of Rs 10 crore that was paid to him for Star Plus show Kaun Banega Crorepati season three, which he hosted in 2007. Another relief came after the actor was spared from paying Rs 7 crore tax for the fees he charged from Star India.

According to an Economic Times report, Shah Rukh was recruited for 104 episodes of the game show but after 52 episodes, seeing the falling TRPs, the channel decided to shelve the remaining episodes and recover the money from the actor. But SRK, instead of returning the money, signed a barter deal with the channel. He would pay Rs 10 crore to the team and in return sponsorship rights were to be awarded to Star India.

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On this ground, SRK claimed a deduction of Rs 10 crore from his tax amount as it was an expense and not an earning for him. But the tax officer didn’t agree with Shah Rukh’s claim and wanted him to pay tax, including on this amount. Talking to the website, director of Taxmann.com said, “The loss suffered by Star India due to non-production of another season of KBC with SRK was sought to be recouped by SRK with the earnings from the sponsorship of KKR IPL team. So, SRK paid Rs 10 crore to get sponsorship of KKR for Star India, even though he was not legally liable to incur such a huge sum.”

In the second case where the Fan actor was asked to pay Rs 7 crore as tax for his income earned from the promotions of KBC with the Star team in Dubai and London, ITAT yet again gave a decision in favour of the Bollywood king and told the income tax department that they cannot demand such additions. During the investigations, Shah Rukh has always maintained that he never attended any promotional events as they never happened.

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So can we consider this as an end of Shah Rukh’s legal trouble? Not yet. The actor might have to pay tax for his Dubai villas in India and not in UAE. According to a ruling of ITAT, Indian citizens who have a residence outside the country will have to file it in their tax returns here in India. Earlier, it could have been paid in UAE under the India-UAE treaty. Following the previous rules, SRK didn’t offer his foreign property for taxation in India but now his Income Tax file is being reworked under ‘income from house property’.

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