Big relief for Shah Rukh Khan as superstar wins tax case in his favour, know details

Actor Shah Rukh Khan has achieved a significant victory in his tax case, with the Income Tax Appellate Tribunal (ITAT) siding with him. The tribunal has overturned the tax department's decision to reassess his case for the 2011-2012 financial year.

As reported by The Times of India, the ITAT has reversed the reassessment proceedings issued by the tax authorities. In a tax dispute, the tax officer challenged Shah Rukh Khan's reported income of ₹83.42 crore, denying his claims for a foreign tax credit for taxes paid in the UK. As a result, the officer reassessed the actor's income at ₹84.17 crore. This reassessment was done more than four years after the end of the relevant assessment year, 2012-13.

The ITAT bench has ruled that the income-tax department's reassessment of Shah Rukh Khan's case was not legally justified, granting him a major victory in his ongoing dispute over foreign tax credit claims. This case is part of the broader litigation concerning the taxation of Shah Rukh's earnings from the 2011 film RA One.

According to the report, the agreement between Shah Rukh Khan and Red Chillies Entertainments (the film production and distribution company founded by Khan) specified that 70% of the shooting for the film would take place in the UK. As a result, 70% of the income was expected to be earned overseas, making it subject to UK taxes, including withholding tax. In this arrangement, the actor's remuneration was processed through Winford Production, a UK-based entity.

As per the report, Shah Rukh Khan and Red Chillies Entertainments, the film production and distribution company co-founded by the actor, had an agreement specifying that 70% of the film's shooting would take place in the UK. As a result, 70% of the income generated would be considered overseas earnings, subject to UK taxation, including withholding tax.

The actor's remuneration was routed through Winford Production, a UK-based entity to implement this setup. However, the tax authorities argued that this payment arrangement led to a revenue loss for India.

The ITAT bench, consisting of Sandeep Singh Karhail and Girish Agrawal, ruled that the reassessment proceedings were invalid. The bench noted that the assessing officer had not presented "any fresh tangible material" to justify a reassessment beyond the statutory four-year period.

Additionally, they highlighted that the disputed issue had already been reviewed during the initial scrutiny assessment. Ultimately, the bench concluded that the reassessment proceedings were legally flawed on multiple grounds.

Shah Rukh Khan is currently working on his upcoming film, King, which will also feature his daughter, Suhana Khan. The film is set to begin production in March 2025 and is scheduled for a global release in 2026. At present, Shah Rukh is in Jaipur, where he is attending the 25th edition of the IIFA Awards.