Huge sigh of relief for the Bollywood besties Shah Rukh Khan and Juhi Chawla who co-own the IPL team Kolkata Knight Riders. They were seriously charged by the Income-tax department that sent notices to the two for undervaluing the shares that they sold. Before the central investigating agency, ED (Enforcement Directorate) had sent official notices to Chawla and Khan and his company Red Chillies Entertainment Pvt Ltd (RCEPL) for the same issue.
Both SRK and Juhi Chawla are given clean chit from the Bombay High court who granted a stay on Income Tax department's notice. 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. The court ordered the stay of notices sent by the department against all of them. A good news at the end of the day for the good old friends.
In 2008, Shah Rukh Khan formed a company named Knight Riders Sports Pvt. Ltd (KRSPL) to acquire IPL franchise rights of cricket team Kolkata Knight Riders. Earlier, the firm was owned only by SRK's Company Red Chillies and his wife Gauri Khan. After the IPL triumph, KRSPL co gave 50 lakh shares to a Mauritius-based company, The Sea Island Investment Ltd (TSIIL) which was owned by Chawla's husband Jay Mehta and Chawla herself. While Chawla is later said to have transferred her share of 40 lakh shares to TSIIL. All this is reported to have happened before 2010.
Everything became noticeable as transactions between SRK, Juhi Chawla, TSIL and RCEPL were done at the face value of each share priced Rs 10. Whereas ED alleged that the market value of all these shares was much higher and this undervaluation of shares cost a lump sump loss of Rs 73.6 crore to the Indian Government. The Income Tax Department didn't function until the ED took up the case.