Is Shahrukh Khan An Income Tax Defaulter ?

If sources are to be believed the Bombay High Court recently challenged Income Tax Appellate Tribunal’s order, which in June 2008 was ruled in SRK’s support. According to the appeal, SRK owes a sum of Rs 19.43 lakh, after an exemption of Rs 72.67 lakh for the year 1998-1999. An anonymous source suggests, “The appeals for the remainder of the amount will come up for hearing in separate cases over the next few weeks.”

During the year 1998-1999, SRK declared his annual income to be Rs 2.01 crore. However, out of this, Rs 72.67 lakh was acquired from international endorsements. Rs 19.43 lakh was touted as ‘towards royalty’ from Jeanne Arthes Perfume, who launched a perfume after SRK. For this, Shah Rukh Khan sought deductions under 80RR of the Income Tax Act, by claiming that the earnings were a professional receipt from an international source.

Nevertheless, the Income Tax department maintained that SRK garnered this sum by endorsement rather than his profession – acting.

According to the Assessment Officer, “the said receipts had not been derived from the exercise of his profession – ie, acting – but from a commercial venture in which the actor had commercially exploited his brand equity, popularity and mass appeal”.

With the Assessment Officer limiting the deduction to 5 percent instead of Shah Rukh’s claim of 75 percent, the latter approached the Chief of Income Tax to appeal against the Assessment Officer’s AO’s order in April, 2002.

However, dissatisfied with Chief Income Tax ruling, both parties moved to Income Tax Appellate Tribunal in 2008, it allowed both the appeals. Finally, the Income Tax department has now filed an appeal in High Court against Income Tax Appellate Tribunal’s order, which somewhat ruled in support of Shah Rukh Khan. Source