Is Tarun Tahiliani, one of India’s leading fashion designers, an artiste? Those who admire his creations might think so, but not the income-tax [I-T] department. It’s been almost a decade now since the I-T first objected to Tahiliani seeking tax exemption on his foreign income for being an “artiste”, and it still continues to dispute his claim.
On October 31, 2000, Tahiliani, whose designs are donned by famous personalities, sought deduction of his income from foreign assignments under section 80RR.
Section 80RR refers to Indian authors, playwrights, artists, musicians, sportsmen and actors who receive payments from foreign parties for their work. Under the section, 75% of the total foreign income of an artiste is exempted from tax.
In his returns submitted to the I-T department on October 31, 2000, Tahiliani had declared his income as Rs83.90 lakh. Claiming deductions under section 80RR, he said his taxable income would come to Rs53.24 lakh following 75% exemption of his income from foreign assignments.
However, the assessing officer refused to grant him the exemption in 2005. Following this Tahiliani appealed to the income-tax appellate tribunal [Itat]. The latter then said that the designer should be given exemption under section 80RR as he belonged to a creative profession.
Ten years on, the I-T department is still pursuing its appeal against the Itat order. It insists that Tahiliani, the first Indian designer to showcase his designs at the prestigious Milan fashion week in 2003, cannot be called an artiste as defined under section 80RR.
A division bench of justice DY Chandrachud and justice JP Devadhar is expected to hear the I-T appeal on Friday. The department is also contesting similar deductions sought by Tahiliani on his taxable income for 1999-2000 and 2001-2002.