Bollywood & Kollywood Superstars' Tryst with Income-tax - Part 1

October 03,2015
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P.V. Srinivasan (Corporate Advisor)

The entertainment industry is much beyond what it is romanticized for. Various artists and commercial establishments such as producers, distributors and exhibitors combine together for a project called “film”, with an expectation of windfall profits.  The Indian film industry, better known by the sobriquet “Bollywood”, is expected to touch INR 219.8 billion by 2018[1]. The number, though certainly impressive, is not astounding in view of the fact that the ‘100 crore club’ is the benchmark for the success of a movie now-a-days. 

As I was day-dreaming like Mungerilal, I saw a news item that the effervescent actor Vijay and his glamorous co-stars in the recently released Tamil movie Puli were subject to income-tax searches based on the information that a lot of investments in the film are not explained.  I drew a simile that Puli, the tiger, is cornered by cats.  It also dawned on me that that the real life for film personalities would not mirror their “reel life”.  One would be naïve to think otherwise. It was a pointer to the fact that like any other industry, the entertainment industry also has its fair share of tax litigation. More so because of the pressure to hit the jackpot as failure of a project tends to make someone in the value chain debt ridden. An insight into some judicial precedents would amplify the commercial aspects of this glamorous business segment.

amitabh_bacchan

The actors, being perceived as receiving a major chunk of the pie, have been at loggerheads with the tax department. Two years back when the legendary movie actor Mr. Amitabh Bachchan was slammed with an income tax liability of Rs.1.66 crores on his earnings from the popular quiz show ‘Kaun Banega Crorepati’, the actor emulated the fatalistic and sardonic proverb of Benjamin Franklin “both death and Income-tax Department are inevitable in life”.

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