Shah Rukh Khan wins tax case over 'Ra.One' earnings dispute
What's the story
Bollywood superstar Shah Rukh Khan has secured a major legal victory in a long-running tax dispute related to his earnings from the 2011 film Ra.One.
The Income Tax Appellate Tribunal (ITAT) has ruled in Khan's favor, dismissing the Income Tax Department's reassessment proceedings for the financial year 2011-12.
The reassessment was held invalid as it lacked fresh evidence and exceeded the four-year statutory limit.
Case details
Background of the tax dispute
The tax row started when Khan reported an income of ₹83.42 crore for the 2012-13 assessment year, including the earnings from Ra.One.
However, the tax officer rejected his claims for foreign tax credit (FTC) on taxes paid in the United Kingdom and subsequently reassessed his income at ₹84.17 crore.
This reassessment took place over four years after the relevant assessment year, exceeding the statutory limit under Section 147 of the Income Tax Act.
Tribunal's decision
ITAT's ruling on Khan's reassessment
The ITAT bench concluded that the Income Tax Department's reassessment of Khan's case was not legally justified.
The assessing officer reportedly did not furnish "any fresh tangible material warranting a reassessment beyond the four-year statutory period."
The ruling comes as a major win for Khan in his long-standing fight over foreign tax credit claims.
Tax arrangement
Khan's UK tax arrangement under scrutiny
As part of his deal with his production house Red Chillies Entertainment, 70% of Ra.One was shot in the UK. Consequently, an equal portion of his income was subject to UK taxes.
To facilitate this, his earnings were routed through Winford Production, a UK-based entity.
The tax authorities contended this caused a loss of revenue to India and, hence, denied his foreign tax credit claim.
Information
Khan's professional engagements amid legal victory
While the actor has not officially commented on the ruling, he continues to focus on his work. Khan is currently busy with his upcoming film, titled 'King,' which also features his daughter, Suhana Khan.