The actor claimed to have given loans to the tune of ₹ 2.63 crore in 2002-03.
Tamil movie star Rajinikanth, against whom the Income Tax Department on January 28 withdrew the procedures related to the alleged concealment of income between fiscal years 2002-2003 and 2004-2005, had claimed to be in the field of “money lending”.
Tax orders consulted by The Hindu point out that the actor claimed to have made loans to the tune of ₹ 2.63 crore, received ₹ 1.45 lakh interest on it in the 2002-2003 valuation year and made a net profit from ₹ 1.19 lakh that year. After disclosing these details, the actor also paid taxes for the profit he made.
Of the total amount, he had offered a loan of ₹ 1.95 crore at an interest rate of 18% to K. Gopalakrishna Reddy; another ₹ 60 lakh to a financier named Arjunlal; 5 lakh to Sashi Booshan; and ₹ 3 lakh to Sonu Pratab. In the computer declarations filed for the year 2003-04, the actor allegedly added a loan amount of another ₹ 10 lakh, granted to Murali Prasad.
That year, he claimed to have received interest of 1.99 lakh and reported a net profit of 1.64 lakh. However, in 2004-05, he claimed to have written off loans to the tune of ₹ 1.71 crore after reporting them as ‘bad debts’. For this reason, he filed negative statements, claiming to have suffered a loss of ₹ 33.93 lakh that year.
Suspecting that the actor had claimed to be in the money lending business only to avail himself of “bad debts” in the future, computer detectors questioned him in February 2005. Mr Rajinikanth had stated that he did not had not acted. in all films from fiscal year 2002-03 to 2004-05.
He had said that he earned income from his Raghavendra wedding hall and the Arunachala guesthouse at Kodambakkam in Chennai. In addition, he had started a production company, “ Lotus International ”, for the production of his 2002 film. Baba, that bombed at the box office.
When asked whether he was also engaged in the money lending industry, the actor reportedly replied: “No. I might have given loans and advances, but it’s not like a money lending business. “He also claimed that everyone he loaned money to were his friends and that hand loans to them would not come back to engaging in the money lending business. When confronted with the money loaned to financier Arjunlal, he said, “This one transaction to a financier will not be a matter of lending money.” When questioned, the accountant of actor TS Sivaramakrishnan reportedly said: “According to the books of accounts he gave a loan to six people. I don’t know if it is a money lending activity.”
On the basis of these elements and after noting that the actor had not obtained a license to carry on a money lending activity, the evaluators arrived at a At first glance conclusion that he had only offered hand loans to friends. But Mr Rajinikanth later wrote to the ministry, claiming he was indeed involved in money-lending activities. “It was initially interpreted by me under a misconception that a money lending business should only mean pawn brokering … On this understanding, I could not clarify in the manner required at the time of the recording of my statement. Later I was made to realize that what I was doing … is nothing more than money lending activities, ”he said.
“I exercise this financial activity like any ordinary financier would, to begin with, using my own funds from my tax revenues. Money lending and interest rate varied from person to person depending on their association / background. I had lent money only as a check and not otherwise, ”he explained.
When things turned out like this, he filed a revised tax return on February 14, 2005 and withdrew his previous written off bad debt claim in the amount of ₹ 1.71 crore. Claiming that he was still making efforts to recover the loan amount, he insisted on rescinding the premature bad debt claim and stated that his income for 2004-05 was in fact ₹ 1.46 crore. However, the evaluators for all three years came to the conclusion that he was not engaged in a money-lending business and therefore income from his loans could not be assessed under the heading “income. of the company ”. They concluded that the interest on hand loans could only be assessed as “income from other sources”.
The actor then appealed the case to the Income Tax Appeal Tribunal and obtained an order in December 2009 that his income from the money-lending activity should be assessed as “business income”. In the meantime, he also obtained the bad debt claim admitted by the same appeals tribunal for the 2006-2007 tax year.