Bollywood superstar Shah Rukh Khan has achieved a significant legal victory in a tax dispute concerning his 2011 film, “RA.One.” The Income Tax Appellate Tribunal (ITAT) ruled in his favor, quashing reassessment proceedings initiated by tax authorities for the financial year 2011-12.
Background of the Dispute:
Foreign Tax Credit Claim: Khan declared an income of ₹83.42 crore in his tax return, claiming a Foreign Tax Credit (FTC) for taxes paid in the UK. This claim was based on the agreement that 70% of “RA.One” was shot in the UK, subjecting a substantial portion of his remuneration to UK taxes.
Tax Authorities’ Stance: The Income Tax Department denied Khan’s FTC claim and reassessed his income at ₹84.17 crore, alleging a revenue loss to India due to the payment arrangement through Winford Production, a UK-based entity.
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Invalid Reassessment: The ITAT bench, comprising Sandeep Singh Karhail and Girish Agrawal, declared the reassessment proceedings invalid. They noted that the tax officer failed to present any fresh tangible material to justify reopening the case beyond the four-year statutory period.
Full Disclosure: The tribunal observed that Khan had fully disclosed his foreign income and tax credits in his original filing, which had already undergone scrutiny. Therefore, the reassessment was deemed a “mere change of opinion,” rendering it legally unjustified.
This ruling underscores the importance of proper adherence to reassessment protocols and reinforces protections for taxpayers with overseas earnings.
