France returning Italian island? That's a lie (5)
I believe the answer is:
fable
'that's a lie' is the definition.
(I've seen this in another clue)
'france returning italian island?' is the wordplay.
'france' becomes 'f'.
'returning' says the letters should be written backwards.
'italian island?' becomes 'Elba' (Elba is an Italian island).
'elba' written backwards gives 'able'.
'f'+'able'='FABLE'
(Other definitions for fable that I've seen before include "It's not true" , "Myth, legend" , "there may be a moral to it" , "Mythological story" , "Short moral story" .)