Foreign Tax Credit Dispute: Shah Rukh Khan Wins Tax Case

Mar 22

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Foreign Tax Credit Dispute - Bollywood superstar Shah Rukh Khan has won a major victory in a long-running foreign tax credit dispute with the Income Tax Department. The Income Tax Appellate Tribunal (ITAT) ruled in Mr. Khan's favor, rejecting the department's claims about his declared income for 2011-2012.

What is a Foreign Tax Credit Dispute?

The dispute was about taxes on Mr. Khan's movie RA One, which came out in 2011. The IT department questioned Mr. Khan's declared income of Rs 83.42 crore for that year and denied his request for foreign tax credit on taxes he paid in the UK.

The IT department recalculated his tax as Rs 84.17 crore, issuing this assessment more than four years later.

ITAT Ruling on Foreign Tax Credit Claim

The ITAT ruled that the IT department's reassessment was not legal. They said the assessing officer didn’t provide any "new and clear evidence" to justify reopening the case after four years.

Since the matter had already been reviewed during the original assessment, the tribunal declared the reassessment invalid for multiple reasons.

Importance of Following Proper Compliance for Foreign Tax Credit

The case also focused on Mr. Khan's contract with Red Chillies Entertainment, which stated that 70% of the film’s shooting happened in the UK. Because of this, Mr. Khan argued that 70% of his income should be taxed in the UK.

The IT department claimed this arrangement reduced India's tax revenue, so they rejected his foreign tax credit claim. However, ITAT ruled in favor of Mr. Khan, confirming that his claim was legitimate.

For individuals or businesses seeking guidance on Foreign Tax Credit, Income Tax Returns, or Tax Planning, consulting professional tax experts can ensure smooth compliance.

Final Outcome

This win is a big relief for Shah Rukh Khan and highlights the importance of following proper legal steps in tax reassessments. If you need assistance with Income Tax Filings, GST Filings, or Audit Services, our expert team at SS Auditors is here to help.