Mumbai, January 10
The Income Tax department has issued a notice to Bollywood actor Shah Rukh Khan asking him to pay tax on the Rs 17.84-crore villa in the United Arab Emirates, sources said today.

The actor has said that he received the villa as a gift from a Dubai-based company during assessment year 2008-09 for promoting a real estate project. In April 2009, Khan had filed his returns declaring an income of Rs 126.31 crore for the assessment year 2008-09. He said his income was from house, property, profession, capital gains and other sources.

The actor also included his Dubai signature villa — a part of The Palm, Jumeirah — as a gift received from Nakheel Public Joint Stock Company (NPJSC) on September 16, 2007. According to the I-T department, Khan received the villa under a gift deed in return for lending his name to promote NPJSC. The department assessed that the villa was taxable and a notice was issued to Khan on November 26, 2010.
However, the actor replied saying the gift did not constitute his business or professional income. The company also submitted a letter to the I-T department in October 2010 stating that Khan had not provided any professional services.

NPJSC further clarified that the actor had attended its annual function as a gesture of friendship towards Sultan Ahmed Bin Sulayem, NPJSC’s executive chairman.

However, the I-T department issued another notice to the actor on December 27, 2010 stating that NPJSC was using the Shah Rukh Khan’s name for endorsing its Palm Project since 2004 on its official website and in electronic and print media. 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 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 or loss.

Khan could not be immediately contacted for his comments. — PTI