TAX NEWS - June 2010

India Tax: Fashion designer an artist, can get tax rebate

The Bombay High Court on Monday held that a fashion designer is an artist and dismissed the appeal filed by the Income Tax (I-T) department challenging the tax exemption granted to one of the leading designer, Tarun Tahiliani, on his foreign income under section 80RR of the the Finance Act, 1969.

A division bench of Justice D Y Chandrachud and Justice J P Devadhar on Monday said that they had concurred with the findings of the Income Tax appellate tribunal (ITAT) granting an artist's privilege to Tahiliani.

The section 80RR, refers to Indian authors, playwrights, artists, musicians, sportsmen and actors who receive income from foreign parties for their work. In such cases, under section 80RR, 75% of the total income obtained from the foreign government is exempted from tax.

Tahiliani had sought a tax exemption under the section 80RR on his declared taxable income of Rs 83.90 lakh in his returns submitted to the IT department on October 31, 2000.

The IT department had argued that Tahaliani is not an artist and supported its claim relying on Wikipedia.

Submitting definitions of the words design, art and artist procured from Wikipedia, the IT department's advocate Anamika Malhotra told the court that "design" was applicable to applied arts and not fine arts or performing arts.

Tahaliani's counsel, however, argued that person who stitches a dress is not an artist but the one who conceptualises it, certainly is.