Shah Rukh Khan wins tax dispute case, ITAT quashes reassessment order: Report

As per a new report, the ITAT bench held that reassessment of Shah Rukh Khan's case by the income-tax department was not legally justified.

In a significant victory, actor Shah Rukh Khan has emerged triumphant in a tax dispute, with the Income Tax Appellate Tribunal (ITAT) delivering a verdict in his favour. The tribunal has quashed the reassessment proceedings and order issued by the tax authorities for the 2011-2012 financial year.

The litigation related to taxation of Shah Rukh's remuneration for the movie RA One, which released in 2011. (File Photo/ PTI)

Shah Rukh Khan wins tax dispute

According to a report by The Times of India, ITAT has overturned the reassessment proceedings.

In a dispute over his income-tax return, the tax officer disputed Shah Rukh's declared income of ₹83.42 crore, rejecting his claims for foreign tax credit for taxes paid in the UK. Consequently, the officer reassessed the actor's income at a higher amount of ₹84.17 crore. This reassessment was made more than four years after the end of the relevant assessment year, specifically 2012-13.

Now, the ITAT bench held that reassessment of the case by the income-tax department was not legally justified, handing the actor a significant victory in his long-standing dispute over foreign tax credit claims

The litigation related to the taxation of Shah Rukh's remuneration for the movie RA One, which was released in 2011.

According to the report, the agreement between the actor and Red Chillies Entertainments (a film production and distribution company founded by Khan), 70% of the film's shooting was to take place in the UK and therefore 70% of the income would accrue overseas (which would be subject to UK tax including withholding tax). The actor's remuneration, in this regard, was routed through Winford Production, a UK entity.

According to the report, an agreement existed between Shah Rukh and Red Chillies Entertainments, a film production and distribution company co-founded by the actor, stipulating that 70% of the film's shooting would occur in the UK. Consequently, 70% of the income generated would be deemed overseas earnings, subject to UK taxation, including withholding tax. To facilitate this arrangement, the actor's remuneration was channelled through Winford Production, a UK-based entity. The tax authorities contended that such an arrangement of payment, caused a revenue loss to India.

More about the new judgment

Now, the ITAT bench composed of Sandeep Singh Karhail and Girish Agrawal, ruled that the reassessment proceedings were invalid. They stated that the assessing officer had failed to demonstrate “any fresh tangible material warranting a reassessment beyond the four-year statutory period”. It also shared that the disputed issue had already been examined during the initial scrutiny assessment of the case. The bench concluded that the re-assessment proceedings were bad in law on more than one count.

Shah Rukh’s work files

Shah Rukh is currently working on his next film, titled King. The film will also star his daughter Suhana Khan. The film will go on floors in March 2025 and will be released globally in 2026. He is currently in Jaipur to be part of the 25th edition of the IIFA Awards.