Daijiworld Media Network – New Delhi
New Delhi, Nov 9: Bollywood star Aishwarya Rai Bachchan has scored a major victory against the Income Tax Department, winning a Rs 4-crore tax dispute in the Income Tax Appellate Tribunal (ITAT) Mumbai, multiple reports confirm.
The ITAT ruled that the tax authorities had failed to provide adequate reasons for rejecting Rai Bachchan’s original income computation and had not properly considered the facts of her case, Business Insider reported. The dispute arose over the actor’s income tax filings for assessment year 2022–23 (FY23–24).
According to The Economic Times, Rai Bachchan had declared a total income of Rs 39.33 crore for AY23, which included Rs 2.14 crore from exempt investments. She had also voluntarily disallowed Rs 49.08 lakh in her filings, stating no direct expenses were incurred to earn the exempt income under Section 14A.
The I-T Department issued a comprehensive scrutiny notice requiring a detailed verification of her tax returns. Although she responded with clarifications, the assessing officer (AO) rejected them, applying Section 14A read with Rule 8D and disallowing Rs 4.60 crore, raising her assessed income to Rs 43.44 crore.
The case initially went to the Commissioner of Income Tax (Appeals) [CIT(A)], which ruled in her favour, but the department subsequently appealed to ITAT.
Rai Bachchan’s legal team argued that her detailed reply had been dismissed and that the AO had not given due consideration. They noted her actual expenses amounted to Rs 2.48 crore, far below the AO’s disallowance of Rs 4.60 crore.
The I-T Department, meanwhile, contended that the AO had correctly invoked Section 14A with Rule 8D and had documented satisfaction.
In its ruling on October 31, 2025, ITAT observed that the AO had rejected Rai Bachchan’s calculations without examining investment particulars and actual income.
The tribunal described the discrepancy between total expenses and the disallowance as “unreasonable” and cited the Supreme Court’s 2018 Maxopp Investments decision, which requires the AO to record reasons for rejecting a taxpayer’s claim before applying Rule 8D – a step the officer had failed to follow.
IndiaFilings explains that Section 14A of the Income Tax Act, 1961, governs expenses incurred to earn income exempt from taxation. In such cases, certain expenditures may not be allowed as deductions when computing Gross Total Income.
The ITAT ruling is being hailed as a landmark win for Rai Bachchan, underscoring the importance of proper procedure and documented justification by tax authorities.