Despite having a reputation of paying advance tax — Rs 27 crore on one occasion — actor Shah Rukh Khan could not escape a legal tangle with the Income Tax (I-T) Department.
The Bombay High Court last week admitted an appeal against Khan for alleged tax exemption of Rs 72.67 lakh in 1998-99 from income earned from a foreign country.
For the assessment year 1998-99, Khan had declared an income of Rs 2.01 crore.
In addition to the income earned in India, Khan had shown foreign receipts of Rs 72.67 lakh, including a receipt of Rs 19.43 lakh being an advance towards royalty for advertising a perfume named after him, SRK.
But while paying tax, Khan had claimed deduction under Section 80 RR of the Income Tax Act, claiming that they are professional receipts or income from foreign sources.
The I-T assessing officer had allowed it, but the department challenged the deduction before the Income Tax Appellate tribunal.
On June 19, 2008, the tribunal ruled in favour of Khan.
The I-T department then filed an appeal in the high court, challenging the tribunal order.
According to the department, the above income [Rs 72.67 lakh] was not derived from exercising his profession [of acting] but from commercial venture. Khan has allowed commercial exploitation of his brand equity, popularity and mass appeal, claimed the department.
The department sought that the high court calls for all documents and proceedings pertaining to the said venture.
In January 2008, Khan paid advance tax of Rs 27 crore till December 15, 2007, putting his income at over Rs 100 crore. And for 2006-07, he paid Rs 18 crore.