Shah Rukh Khan wins Wealth Tax Case - Interest free loan to wife is not transfer of asset
ACTOR Shah Rukh Khan declared net wealth of Rs.2,75,28,460/- in his wealth tax return. The Assessing Officer accepted the wealth declared by the assessee by passing an order u/s 16(3) of the Wealth Tax Act, 1957. The Revenue audit raised a query and consequently, notice dated 15/03/2011 was issued to the assessee. The wife of the assessee, Gauri Khan, purchased a residential house at Delhi for Rs.1,65,95,000/- and jewellery worth Rs.70,22,658/- out of the loan of Rs.2,28,88,530/- given by the assessee. The Assessing Officer was of the view that wealth of the assessee escaped assessment, therefore, the loan amount of Rs.2,28,88,530/- was to be clubbed in the hands of the assessee for computation of his net wealth. He further observed that the jewellery would have been purchased by the assessee which he deliberately avoided and thus, there was indirect "transfer of asset" to the wife, by the assessee, therefore, within the meaning of provision of section 4(1)(a)(i) of the Wealth Tax Act, 1957, the transferred amount is to be included in the net wealth of the assessee. On appeal, the Commissioner of Income tax (Appeals) affirmed the view of the Assessing Officer against which the Khan is aggrieved and is in appeal before ITAT.
The Tribunal noted that for the Assessment Year 2006-07, Shah Rukh declared a net income of Rs.36,63,98,754/- and on which tax was paid to the tune of Rs.10,25,00,000/-.
The Tribunal observed,
Even as per the provisions of the Wealth tax Act, extending cash loan, to the wife, by the assessee does not come within the definition, therefore, it can be said that there is no "transfer of asset" as has been alleged by the Department.
The assessee was not the owner of the asset which was transferred to the wife, as argued by the DR, rather out of the interest free loan, the wife of the assessee purchased/acquired "new asset" in her own name from the third parties, thus, there is no justification for adding the amount as no 'asset' has been transferred.