Tax breaks for foreign earnings of actress

Actor Aishwarya Rai Bachchan will be given a tax exemption for income earned from stage performances abroad and modelling, as an actor, for an international watch company.

The Income Tax Appellate Tribunal (ITAT) in Mumbai passed the detailed order, which is likely to benefit many actors and sportspersons, this week.

The tribunal accepted that while performing in stage shows abroad and modelling, Rai, as an actor, is entitled to benefits under section 80 RR of the Income Tax Act.

The section allows a certain percentage of tax exemption to authors, playwrights, artists, musicians, actors and sportspersons on income derived from practicing their profession abroad.

Rai had claimed a tax exemption of Rs 54.9 lakh on the Rs 1.85 crore she earned abroad in the assessment year 2003-2004.

The earnings were from stage shows and endorsement of watches made by Swiss company Longines Francillon.

Rai was first denied the exemptions.

The assessment officer had noted that she participated in the stage shows and advertisements not as an actor or artiste, but as “Aishwarya Rai”, a popular figure.

A bench of ITAT members A.L. Gehlot and R.S. Padvekar ruled, “An actor does not mean only acting in films. It can be even on stage.” It further ruled that though every appearance of a film star on stage may not be acting, if an actor is a professional, engaged by a party, wherein the assessee (actor) has to give a photo session or participate in video shoots, it amounts to acting.

Rai had appealed to the Commissioner of Income Tax (Appeal) who allowed her tax exemption for stage shows but not for endorsing the watch brand.

The department appealed against the actor being granted an exemption for stage shows.

Rai, in turn, appealed against the decision to disallow her exemption for endorsing the watch brand.

The tribunal also relied upon its earlier ruling of 2006 when actor Amitabh Bachchan — now Rai’s father-in-law — had claimed tax exemption under section 80 RR for earnings from anchoring television show Kaun Banega Crorepati.

The tribunal had then ruled that Bachchan had anchored the show as an artiste.

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