Aishwarya Rai Bachchan has won a major legal victory in her tax dispute after the Income Tax Appellate Tribunal (ITAT) Mumbai ruled in her favour. The tribunal deleted a Rs 4 crore disallowance raised by the income tax department for Assessment Year 2022-23.
Dispute involved tax-free income expenses
The dispute centred on Section 14A of the Income-tax Act, which stops deductions for expenses incurred to earn exempt income, the Economic Times reported.Aishwarya declared a total income of Rs 39.33 crore for the year, including Rs 2.14 crore from tax-free investments. She made a voluntary disallowance (suo-motu) of Rs 49.08 lakh in her return, saying no direct expenses were incurred for earning the exempt income. However, the Assessing Officer (AO) rejected her calculation and applied Rule 8D, resulting in a disallowance of Rs 4.60 crore and raising her assessed income to Rs 43.44 crore.
Tax department disagreed with calculation
As reported by Business Today, the tax department argued that the AO correctly used Section 14A along with Rule 8D and had recorded his satisfaction. But Aishwarya’s representative said the AO did not properly record his satisfaction and dismissed her detailed reply without considering it carefully. They also pointed out that her total expenses were only Rs 2.48 crore, while the AO’s disallowance was Rs 4.60 crore, which was much higher and unfair.When she appealed, the Commissioner of Income Tax (Appeals) [CIT(A)] granted her relief. The tax department then took the matter to the ITAT. The tribunal found that the AO had simply rejected her calculation and made the disallowance without separating the investments that actually earned exempt income. The tribunal also noted that her total expenses were only Rs 2.48 crore, so the disallowance of Rs 4.60 crore was unreasonable.The ITAT said, “Accordingly, we are of the considered view, that the disallowance made by the ld. AO over and above the suo-moto disallowance made by the assessee is without any basis and deserves to be deleted. In the result, the appeal of the revenue is dismissed.” The tribunal emphasised that the AO had not properly considered the facts or provided adequate reasoning.
Tribunal referred legal precedent supporting her
ITAT Mumbai cited the Supreme Court’s ruling in Maxopp Investments Ltd. Vs. CIT (2018), which says the AO must explain why a taxpayer’s disallowance is wrong before using Rule 8D. Rai Bachchan had only included expenses for investments that actually earned exempt income, following the Vireet Investments Pvt. Ltd. decision. On October 31, 2025, she won the case in ITAT Mumbai.
On the work front
Aishwarya was last seen in Mani Ratnam’s ‘Ponniyin Selvan: II’, released in April 2023. She reprised her role as Nandini. The film also starred Vikram, Ravi Mohan, Sobhita Dhulipala, Karthi, Aishwarya Lekshmi, Prakash Raj, Rahman, R. Parthiban, and Jayaram in important roles.Disclaimer: The information in this article is based on reports of a legal hearing from third-party sources. It is intended for informational purposes only and does not constitute legal advice. The publication is not responsible for any errors or omissions in the reported information. Go to Source
