ITAT Absolves Shah Rukh Khan of Tax Reassessment on ₹83 Crore Income Connected to Red Chillies’ Ra.One [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently quashed reassessment proceedings initiated against Bollywood superstar Shah Rukh Khan for the Assessment Year 2012-13, absolving him of a tax dispute concerning ₹83.42 crore in declared income.

The case arose after the jurisdictional Assessing Officer (AO) reopened Khan’s tax assessment under Section 147 of the Income Tax Act, 1961, citing an alleged underassessment of income connected to payments received from the UK-based Winford Productions Ltd. for his work in the film Ra.One.

Know Practical Aspects of Tax Planning, Click Here

Read More: The G.O.A.T. of Taxpayers: Shah Rukh Khan is the Top Tax Paying Celebrity in India

It was the contention of the Department that a sum of ₹10 crore was routed through Winford Productions Ltd., which deducted ₹1.40 crore as UK tax before making the final payment to Khan.

The AO argued that this foreign tax credit (FTC) claim led to a loss of revenue for the Indian government, calling for a reassessment under Section 148 of the Income Tax Act, 1961. The matter was first contested before the Commissioner of Income Tax (Appeals) ( CIT(A) ), who upheld the validity of the reassessment, leading to the present appeal before the ITAT.

Aditya Ajgaonkar, Rupal Srimal, and Sujay Ajgaonkar appearing for Shah Rukh Khan maintained that Khan had fully disclosed his foreign income and tax credits in his original return, which was already scrutinized under Section 143(3), thus prompting the reopening of the assessment on a mere change of opinion.

Read More: GST on Popcorn: All You Need to Know About New Tax on Movie Snacks

Senior Department Representative (DR) Kavitha Kaushik defended the reassessment, vehemently relying upon the orders passed by the lower authorities while submitting before ITAT that proceedings under section 147 of the Act had correctly been initiated by the AO in the present case.

The ITAT Bench, comprising Judicial Member Sandeep Singh Karhail and Accountant Member Girish Agrawal, observed that the AO had failed to establish any fresh tangible material justifying the reassessment. It was noted that SRK’s income had already been assessed under Section 143(3) in 2015, and the reassessment proceedings were based on reappraisal of existing records rather than new evidence.

Know Practical Aspects of Tax Planning, Click Here

Citing the Supreme Court’s ruling in Hindustan Lever Ltd. v. R.B. Wadkar (2004), the Tribunal reiterated that reopening an assessment beyond four years requires clear proof of failure to disclose material facts, which was absent in this case.

Read More: GST: Govt likely to Grant 2 Months Window for Credit Note’s ITC

The Bench proceeded to quash the reassessment order in its entirety, granting relief to Shah Rukh Khan and once again affirming that 'Don Ko Pakadna Mushkil Hi Nahi Namumkin Hai'.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates