Rahul Bhatt, a fitness instructor, was let off after questioning as he was unaware of Headley's terror links, said sources in the Mumbai Police.
According to sources, during questioning Rahul admitted to having known Headley and also helping him rent a flat near Breach Candy Hospital.
However, the filmmaker's son was unaware of Headley's actual background and took him to be a foreign national in India on a job.
There were several references to “Rahul” in Headley's e-mail exchanges with his Pakistani handlers that sent the security establishment into a tizzy.
Information provided by the FBI has revealed that Headley operated a visa agency in Mumbai for almost two years until July 2008 and had travelled to India on business visas nine times between 2006 and 2009.
When contacted, Mahesh Bhatt neither confirmed nor denied that his son had been questioned by police in connection with the Headley case.
"This is an issue of national security and not something trivial related to Bollywood. Ask the agencies that deal with national security. I will not say anything more," Bhatt told a television channel.
Investigators initially feared that the 'Rahul' reference was to Congress general secretary Rahul Gandhi but Home Minister P. Chidambaram promptly denied this. There was even speculation that it could be a code name for Shah Rukh Khan, who has played characters named Rahul in several films.
Headley and his alleged accomplice Tahawwur Hussain Rana, a Canadian citizen of Pakistani origin, are being held on charges of plotting attacks in India at the behest of Lashkar.
Intelligence shared by the FBI following the interrogation of Headley revealed that two of India's most prestigious boarding schools -- Doon in Dehradun and Woodstock in Mussoorie -- and the National Defence College in New Delhi were supposed Lashkar targets.
India will ask the US to extradite Headley after the FBI files its report in January.
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