Does an Indian actor’s endorsement or promotion of a product abroad amount to acting and should it get him or her exemption under the Income Tax (I-T ) Act? Though the I-T department says no, actress Aishwarya Rai’s chartered accountants are claiming the opposite. In fact, they secured an adjournment at the tax appellate tribunal recently and will be arguing on the issue in March. Ash is claiming Rs 55 lakh in exemption under section 80 RR of the I-T Act for earnings abroad to the tune of Rs 1.85 crore for the assessment year 2003-04 . These include shows abroad and endorsement deals. Ash had filed an I-T return of Rs 11.46 crore that year, of which she claimed Rs 1.85 crore were from earnings abroad. The bone of contention is her endorsement of watches by Longines Francillon , SA, under agreements signed between her and the Swiss company. The department’s assessing officer and commissioner of appeals held that modelling or endorsement does not amount to acting, and does not qualify for tax exemption. The issue is not merely of Rs 55 lakh, since the endorsement agreements continued for some years. Besides, several stars and cricketers have claimed the benefit and will be facing the same issue. The department has made the distinction between an actor’s shows abroad, for which he gets 80 RR exemption, and endorsement, which they have held, does not entail show of any artistic skill. They have distinguished between what amounts to promoting India’s culture or image abroad (as required by 80 RR) and promoting a product. Besides, in Ash’s case, there is the issue of whether she received the payment for the Longines contract in Swiss Francs or Indian Rupees. The exemption under 80 RR can be claimed only on earnings in foreign currency. Ash’s CA, K C Jain, was not available for comment. – www.economictimes.indiatimes.com
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