Bollywood actor Shah Rukh Khan has no respite in his income tax woes. The Income Tax (I-T) department has challenged the tax relief claimed by the actor for using his club membership and his SUV for professional purpose.
An appeal filed by the I-T department through their advocate Padma Divekar before the Bombay high court challenges the tax deduction allowed to the actor by the income tax appellate tribunal (ITAT) on Rs15 lakh for his Otters Club membership fees and 50% depreciation on his BMW Ranger Rover in the assessment year 2002-03.
A division bench of justice JP Devdhar and justice Mirudla Bhatkar has kept the appeal for hearing after four weeks.
Earlier, the assessing officer (AO) did not allow the tax relief to Khan. The commissioner of income tax (appeals) also rejected Khan’s claim. The actor then approached the ITAT seeking relief.
The ITAT, on July 23, 2007, held that Khan was already a member of other clubs for personal purpose and had taken up the Otters Club membership for professional reasons. The ITAT further held that even if the membership is for some personal use, it is only incidental.
The I-T challenged the ITAT’s order saying the tribunal had erred “in holding that onus to prove that assessee had drawn personal benefits from the club membership was on the department.”
Khan had also claimed a depreciation of 50% on his BMW Range Rover, which amounts to Rs17 lakh.
The ITAT allowed Khan’s claim saying: “The BMW car purchased by the assessee (Khan) is covered by the definition of commercial vehicle … and used in the profession of the assessee.”
However, the AO and the commissioner of IT rejected the claim saying that 20% deprecation is the maximum allowable figure for a personal vehicle. Fifty percent depreciation is allowed only for commercial vehicles. Khan’s BMW was registered as a personal vehicle.