(G.N.S) Dt. 25
Global icon Priyanka Chopra has been making news for all the right reasons. Apart from form her American TV Series ‘Quantico’ she has also been busy with her Hollywood movie ‘A Kid Like Jake’.
However, PeeCee has now reportedly been asked pay up her taxes after she showcased her luxury watches and Sedan as gifts over a four-year period. Priyanka explained that her watch which is worth Rs 4 Lakhs was gifted by the manufacturing company itself as a promotional gift. But, the Income-tax Appellate Tribunal (ITAT) shot down Chopra’s explanation. PeeCee gave the same reason for her Sedan car which is valued at Rs 27 Lakhs. Both these claims were shot down by the ITAT unfortunately.
Values of both the items were treated as taxable perquisites in the hands of Chopra, under section 28(iv) of the Income-tax (I-T) Act. This section treats as taxable, ‘the value of any benefit or perquisite (whether convertible into money or not), arising from business or exercise of profession.’ These are just two of the issues decided by ITAT in a series of orders, passed on January 16 this year, covering four years from the financial year 2006-07 onwards. They came in the wake of appeals (both by the Income-tax department and the actor) on a plethora of disputes, stemming from search and seizure operations carried out in January 2011 by the Income-tax (I-T) authorities. While assessing the financial year 2007-2008, the IT department confirmed the agreement that PeeCee signed with the luxury watch brand. The IT official who is looking into the matter noted that apart from fees of Rs 1.40 crore for modelling and promotional activities over a two-year period, Chopra was also gifted a watch worth Rs 40 lakh. The actress contended that it was a gift received from the company out of love, affection and respect towards her and cannot be a taxable receipt in her hands. The I-T official disagreed and in his order held, “A company, is an artificial person and therefore does not have any emotional feeling of love and affection which is the cardinal factors for treating any transaction as gift.”
The value of the watch is being considered by the I-T official as a perquisite (Any monetary or other incidental benefit beyond salary) under section 28(iv) which would be subject to tax. IT department’s action has been upheld by the Commissioner (Appeals), which is the first level of appeals, prompting Chopra to approach the ITAT, which rejected her argument. Furthermore, ITAT also examined that Priyanka has failed to produce any evidence of the watch being of lesser value making it taxable. Similar situation happened with her Sedan as well when papers of the financial year 2009-2010 were observed. The Sedan worth Rs 27 Lakhs which was being counted as a gift by the car company which had PeeCee as its brand ambassador was upheld by the ITAT.
After hearing the arguments, the ITAT observed that the car received is a part and parcel of the agreement for the professional services rendered by her. Therefore, the car was deemed as a perquisite for the purpose of computing taxes. “As the additional benefit received by Chopra was part and parcel of the agreement she had entered into to promote the Toyota Greenathon Campaign, it was rightly held by the tribunal that the value of the car shall be included in her professional income,” said Rakesh Bhargava, director at Taxmann, a publisher on taxation and corporate laws.
Bhargava added that had she claimed that the car was a ‘gift’ to her from Toyota and not given to her by virtue of being the brand ambassador of the event, it would have been exempt from tax. “As per provisions of Section 56, only gifts in the form of money, immovable property, shares, jewellery, etc, are taxable and any gift of a movable property like a laptop or a car is out of the preview of gift tax,” Bhargava said.
(G.N.S) Dt. 25