New Delhi24 minutes ago
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Superstar Shah Rukh Khan has won a major victory in an income tax related case. The Income Tax Appellate Tribunal (ITAT) has banned the order of re-assessment processing launched by the Income Tax Department for the financial year of 2011-12.
The case is related to the tax credit paid in Britain on the earnings of the film ‘Ra.One’. According to the agreement between Shah Rukh and Red Chile Entertainment, 70% of the film was to be shot in the UK. Therefore, 70% income was considered abroad, which was to be taxed on UK. It also included with-holding tax.
Khan had declared an income of Rs 83.42 crore. The tax officer rejected his claim of tax credit paid in the UK. Income was revalved as Rs 84.17 crore. This was re-assessed to assessment after more than four years from the end of the year (2012-13).
Khan claimed a foreign tax credit in his original IT returns, which was rejected by the IT officer. ITAT admitted that the re -evaluation after a period of 4 years was not legally appropriate.
The bench declares the re-assessment process invalid The bench of ITAT’s Sandeep Singh Karhail and Girish Aggarwal in their order termed the re-assessment process as invalid. The tribunal said that the evaluation officer could not provide any new concrete evidence for revaluation after a 4 -year rule.
The ITAT bench concluded that the re -evaluation proceedings were wrong on more than one ground. This was not in line with the provisions of Section 147. Hence it was canceled. The tribunal found no evidence against Khan.
IT officer rejected the claim of foreign tax credit Khan was paid through Vinford Production, a UK company. Tax officials argued that India lost revenue due to this payment system. The IT officer rejected Khan’s claim of foreign tax credit.
An Indian citizen has to pay tax in India on his global income. There is a provision of foreign tax credit in tax treaties. With this, Indian citizens can reduce the tax paid abroad with their India’s tax liability. This can prevent tax twice on the same income.
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