Poaching case gives sleepless nights to Salman Khan

Updated: Mar 25, 2011, 12:58 PM IST

Spicezee Bureau

Mumbai: Bollywood’s enfant terrible Salman Khan is once again in news, this time for tax evasion pertaining to his thirteen year old blackbuck poaching case, which is giving hard time to the hunk of an actor.

According to the latest news, the income tax tribunal has turned down Salman’s plea to treat the legal expenses he spent while fighting the poaching case to be treated as professional and not personal expenses, and therefore it should be tax free.

Apparently, the tribunal also questioned Salman’s claim that he received advance payments for foreign stage shows and therefore be exempted of taxes.

Salman said he spent nearly Rs 12.9 lakh in the year 2003-04 and another Rs 31.05 lakh in 2004-05 to defend himself in the blackbuck poaching case. When the assessing officer ruled against him, the actor challenged it before the IT commissioner.

However, Salman’s counsel told the IT commissioner that he was filming in Rajasthan when he was mired in the trial. Talking to a daily, the counsel said, "The expenses were incurred for exemption from personal appearance in court and also to prove his innocence. Therefore, the expenditure has arisen out of professional activity,"

After the IT commissioner said the expenditure could be seen as professional expenses, the department appealed against the order in the tribunal stating that the expenses were not related to his profession.

Meanwhile, Salman`s legal representative told the appellate tribunal that, "He was required to attend criminal proceedings personally, which would have caused a loss in business. As he is an actor, he would lose income if he is away. By acting he could generate income and pay more tax also."

However, the tribunal said that Salman`s legal counsel gave dubious replies when asked if the criminal charges occurred due to an incident during the shooting of the film. "Criminal proceedings are always filed against an individual. This has got nothing to do with Salman`s profession. We are of the humble view that expenditure is purely of personal nature. In the case before us, the fact remains that some personal complaints have been lodged against the assessee, which has nothing to do with his professional activity. Therefore, the expenditure incurred in defending against the allegation is definitely of a personal nature. Such expenditure cannot be allowed against the income from business and profession. Therefore we set aside the order of the learned CIT and restore the order of the assessing officer,`` said the tribunal.

By the way, the tribunal questioned Salman`s claim for tax inference on Rs 1.26 crore that he received for his foreign stage shows during May 21, 2003 - July 6, 2003. Even as the actor said he received advance payments, Salman’s correspondence with show organiser Vijay Taneja did not show any payment details made in advance.

The IT act says those who derive income from profession pertaining to foreign sources and receive such income in India as foreign exchange are entitled for 25% deduction in their total income.

Salman was paid USD 28,000 per show. According to commissioner (appeals), the agreement between Salman and Taneja proved date of performance in addition to place of residence of the person who paid the money.

According to the tribunal, the first agreement was made on April 25, 2003 and its payment was to be received during show’s performance. Therefore, the question of receiving the advance payment does not arise.

As of now, due to glaring inconsistencies, the tribunal has referred the matter once again to the assessing officer.