Bombay High Court grants relief to Shah Rukh Khan and Juhi Chawla in IPL FEMA case
| Updated: Feb 7, 2018, 12:12 IST
In March 2017, the IT department had issued notices to Shah Rukh Khan and Juhi Chawla's IPL team and its directors, Shah Rukh Khan, his wife Gauri and Juhi Chawla for violating Foreign Exchange Management Act (FEMA) rules. According to the notice, in 2009, the team promoters had allegedly sold their shares in the company to a Mauritius-based company - Sea Island Investment Ltd (TSIIL) owned by Chawla's husband Jay Mehta, at lower prices. The Enforcement Directorate has alleged a loss of Rs 73.6 crore to the government of India in foreign exchange. However last week, the Bombay High Court granted relief to Shah Rukh and Juhi and issued a stay order on the show-cause notices issued to them by the Income Tax Department over alleged undervaluation of shares.
As has been reported earlier Khan had formed a company, Knight Riders Sports Pvt. Ltd in 2008 to acquire IPL franchise rights of a cricket team. Initially, the company was owned only by Khan's Company Red Chillies and his wife Gauri Khan. However, after the success of IPL, he gave 50 lakh shares to Chawla’s husband’s company, Mauritius-based company, The Sea Island Investment Ltd. Chawla is later said to have transferred her share of 40 lakh shares to TSIIL. All this is reported to have happened before 2010. The Income Tax Department did nothing on the issue until the Enforcement Directorate took up the case in 2017 after going through a change of opinion post closing the case in 2013.
The division bench of justice M S Sanklecha and Justice Riyaz Iqbal Chagla said, "The assessing officer should have applied his own mind before issuing such notices." Chawla's case was listed before the division bench prior to that of Khan and Red Chillies. The lawyers for others just pointed out that their case was exactly the same as Chawla's case. That is when the court ordered the stay of notices sent by the department against all of them.
As has been reported earlier Khan had formed a company, Knight Riders Sports Pvt. Ltd in 2008 to acquire IPL franchise rights of a cricket team. Initially, the company was owned only by Khan's Company Red Chillies and his wife Gauri Khan. However, after the success of IPL, he gave 50 lakh shares to Chawla’s husband’s company, Mauritius-based company, The Sea Island Investment Ltd. Chawla is later said to have transferred her share of 40 lakh shares to TSIIL. All this is reported to have happened before 2010. The Income Tax Department did nothing on the issue until the Enforcement Directorate took up the case in 2017 after going through a change of opinion post closing the case in 2013.
The division bench of justice M S Sanklecha and Justice Riyaz Iqbal Chagla said, "The assessing officer should have applied his own mind before issuing such notices." Chawla's case was listed before the division bench prior to that of Khan and Red Chillies. The lawyers for others just pointed out that their case was exactly the same as Chawla's case. That is when the court ordered the stay of notices sent by the department against all of them.