Fashion designers are artistes and therefore entitled to tax exemption, the Bombay High Court ruled on Monday.
The court was hearing a dispute between designer Tarun Tahiliani and the income tax department, which began in 2002 when the fashion designer declared an income of Rs 93.77 lakh, including Rs 27.02 lakh overseas earnings for the financial year 2001-02.
Tahiliani sought a tax deduction of only Rs 20.26 lakh under section 80RR of the Income Tax Act, which provides exemption of 75 per cent on overseas income to artistes. The rationale behind the exemption is to encourage artistes to project their work and India’s culture abroad, and add to the foreign exchange.
The income tax department, however, declined the request, prompting the fashion designer to challenge the decision before the Commissioner of Income Tax (appeals).
Tahiliani’s plea was dismissed the same year. “… Every profession requires special knowledge and skills… because a fashion designer also requires special skills he does not become an artiste,” the Commissioner noted in his order.
Tahiliani challenged this order before the Income Tax Appellate Tribunal in December 2002, and in its October 2008 order it said “dress designers were artistes,” and were entitled for exemption.
Aggrieved, the income tax department had moved high court.