Designers are artists, it is official now

In an eagerly awaited verdict Tarun Tahiliani and the fashion world emerged victorious after the Bombay High Court ruled that designers are entitled to IT exemptions afforded to other artists. A division bench of Justice D Y Chandrachud and Justice

J P Devdhar dismissed appeals filed by the IT Department against the orders of the Income Tax Appellate Tribunal (ITAT) that had granted exemption to Tahiliani. The designer had declared income of Rs 93.77 lakh, including Rs 27.02 lakh earned overseas, for the financial year 2001-02. Provisions under the IT Act (Section 80 RR) allow artists, playwriters, musicians, sportsmen and directors to deduct 75 per cent of their overseas income from their taxable income. Tahiliani accordingly sought deduction of Rs 20.26 lakh which was 75 per cent of his overseas income.

His reasoning was that fashion designers are artists since the job is all about creativity and conceptualization. The IT Department, however, thought otherwise. They contended that fashion designers are not artists and did not find a place under the provisions of Section 80 RR of the Act. Request denied by the assessing officer, the entire amount was included in Tahiliani’s taxable income.

But Tahiliani challenged the decision before the Commissioner of Income Tax (Appeals), who dismissed his plea, ruling that Tahiliani was not an artist. Tahiliani then challenged the order before ITAT in Mumbai. And in 2008 an order was passed by ITAT stating that designers were artists. After the ITAT ruling favoring Tahiliani, the IT Department challenged the order in HC, which eventually upheld the ITAT decision.

Vikram Phadnis, Designer reacted by saying that anyone who is doing something related to creativity can be called an artist. This includes actors, musicians and painters as well as designers as they are using their mind, brain and soul to develop a talent. By this definition he thinks of himself as an artist.

With the noted designer’s long-drawn out battle against the Income Tax Department, seeking tax relief on his overseas earnings on the premise of being an artist, finally bearing fruit, it created quite an excitement in the fashion industry. Subodh Gupta, India’s Leading Installation Artist opined that what they do is a mutual common ground between fashion and design. It is art which is consumable and with the pressure of coming up with something new every six months, there is a tug-of-war with practicality. This label makes a distinction between plain manufacturing or making replicas, and creating and the verdict has to be lauded for this. This verdict would give a boost to the growing fashion industry of India, especially to emerging designers, who can re-route the money into sustaining local craft.