Aish gets tax relief on US, UK earnings

Aishwarya Rai has got tax relief for earnings from the UK and the US. The Income-Tax
Appellate Tribunal (ITAT), Mumbai has allowed the actress to take credit for the tax already
paid in the UK and the US on these earnings. The income-tax department had wanted to tax the
income she had received from the UK and the US, without giving allowance for the tax she had
already paid in these countries.

The income sought to be taxed was Rs 16.24 crore Ms Rai had earned by performing in the UK
and the US. The department raised a tax demand of Rs 77 lakh for the assessment year 2004-05 , without allowing credit for over Rs 49 lakh she had paid as tax in those two countries.The tax officer’s refusal to give credit for the tax paid abroad was on the ground that her foreign income was not offered for taxation under the Income-Tax Act.

Ms Rai moved the first appellate body — Commissioner of Income Tax (Appeals) — against this
decision. She was allowed to take credit for over Rs 49 lakh tax paid in the UK and the US.
The department did not agree with the CIT (A)’s decision and appealed before the ITAT, the
second appellate body on tax matters. A division bench of the tribunal comprising KC Singhal
and RS Syal pointed out that the Double Taxation Avoidance Agreement (DTAA) which India has signed with the UK and the US have provisions for avoiding double taxation of the same
income.