I-T asks SRK to pay tax on villa gifted by Dubai Co
Mumbai: Shah Rukh Khan has been asked to pay tax on a Rs.1784 crore villa in the UAE gifted to him in 2008 for lending his name to promote a company but the Bollywood actor has contested the IT department`s direction saying it cannot be construed as income from his business or profession.
The 45-year-old actor received the villa as a gift from a Dubai-based company during assessment year 2008-09 for plugging a real estate project, IT sources said.
In April 2009, Khan had filed returns declaring income of 126.31 crore for assessment year 2008-09. He said his income was from house, property, profession, capital gains and other sources.
The actor also included the 8,500 square feet two- storeyed six bed-room themed signature villa in the returns, which is a part of The Palm, Jumeirah, as a gift given to him by Nakheel Public Joint Stock Company (NPJSC) on September 16, 2007, the sources said.
According to the I-T department, the villa received by Khan under a gift deed was taxable and a notice was issued to him in November 26, 2010.
However, the actor replied saying the gift did not constitute his income from business or profession. The company also submitted a letter to the I-T department in October 2010, stating that Khan had not provided any professional services, the sources said.
NPJSC further clarified that the actor had attended the Annual day function as a gesture of friendship towards Sultan Ahmed Bin Sulayem, Nakheel PJSC`s executive chairman.
However, the I-T department issued another notice on December 27, 2010 stating that NPJSC was using the brand name of Shah Rukh Khan for endorsing its Palm Project since 2004 on its official website and in electronic and print media.
It said the actor did not show any receipts related to the endorsement.
The department argued that for other endorsements, Khan was charging huge amounts and this was reflected in his returns, the sources added.
The I-T department said in its notice that an arrangement of business or transaction without putting it in writing and in good faith would under any circumstances be a business or transaction resulting in income/loss. Khan was not available for his comments.