The Mumbai Bench of Income tax Appellate Tribunal (ITAT) has quashes income tax reassessment against Shah Rukh Khan for not paying tax in India on remuneration for the film ‘Ra.one’
The bench of Sandeep Singh Karhail (Judicial Member) observed that there were neither any fresh facts nor some information with regard to the facts previously disclosed, which came to the possession of the AO after conclusion of the scrutiny assessment proceedings, and the entire re-assessment proceedings were initiated on re-appraisal of facts already available on record.
The appellant/assessee, Shah Rukh Khan filed its original return of income on 29/09/2012 declaring a total income of Rs. 83,42,22,630. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) and section 142(1) of the Income Tax Act along with a questionnaire were issued and served on the assessee. The AO passed under section 143(3) of the Income Tax Act, assessed the total income of the assessee at Rs. 84,17,99,923, after making certain additions/disallowances.
Subsequently, after the expiry of 4 years from the end of the relevant assessment year, notice under section 148 of the Act was issued on 31/03/2019. In response to the aforesaid notice, the assessee filed his return of income on 29/04/2019. The AO assessed the total income of the assessee at Rs. 84,17,99,920, after completely denying the claim made under section 90 of the Income Tax Act.
The AO found that M/s Red Chillies Entertainment Pvt. Lid. (RECPL) (wherein the assessee is a Director and holds: 50% shares) has paid artiste remuneration to to the assessee of Rs. 10 Cr. for the film Raone which was routed through Winford Production Ltd.(WPL) (United Kingdom based Line producer). RECPL paid Rs. 10 crore to WPL after deducting TDS of Rs. 1 crore which ultimately paid Rs. 7.60 Crore to the assessee after deducting FEU (UK Tax deduction) of Rs. 1.40 Crore. The assessee offered this amount as income earned in UK and paid additional tax in UK of Rs. 2,70,17,977. This it is evident that such arrangement of payment has caused revenue loss to the government of India.
In its appeal before the CIT(A), the assessee, challenged the reopening of the assessment. The CIT(A) held that the assessee has not disclosed fully and truly all material facts necessary for the assessment and there has been a failure on the part of the assessee, warranting re-assessment.
The assessee contended that there is no allegation in the reasons recorded for initiating the re-assessment proceedings that income has escaped assessment due to failure of the assessee to disclose fully and truly all material facts.
The department relied upon the orders passed by the lower authorities and submitted that proceedings under section 147 of the Income Tax Act have correctly been initiated by the AO.
The tribunal while allowing the appeal held that the re-assessment proceedings initiated by the AO, are bad in law on more than one count and are not in conformity with the provisions of section 147 of the Income Tax Act.
Case Details
Case Title: Shah Rukh Khan Versus DCIT
Case No.: ITA No.6312/MUM/2024
Date: 04/03/2025
Counsel For Appellant: Aditya Ajgoankar
Counsel For Respondent: Kavitha Kaushik
