How Aishwarya Rai Bachchan won a ₹4 crore tax dispute against the I-T Department

In a significant win against the Income-Tax Department, Bollywood actor Aishwarya Rai Bachchan has won a ₹4 crore dispute in the Income Tax Appellate Tribunal (ITAT) Mumbai, according to multiple reports.

The actor won her case at ITAT Mumbai, which ruled that the tax authority had not provided adequate reasons for rejecting the original computation and not properly considered the facts of the case, Business Insider reported.

Aishwarya Rai Bachchan wins ₹4 crore disallowance case: Details

According to a report by the Economic Times, the issue stems from the I-T Department's challenge of the actor's income tax computation for AY22-23 (FY23-24). Here's what we know:

• On October 22, 2022, Aishwarya Rai Bachchan declared total income of ₹39.33 crore for AY23, including investments generating ₹2.14 crore in exempt income, as per the ET report.
• She also declared voluntary disallowance of ₹49.08 lakh in her filings, citing no direct expenses incurred to obtain the exempt income under Section 14A.
• However, the I-T Department sent her a notice of comprehensive scrutiny, under which it conducts detailed verification of ITR filings, it said.
• She reportedly responded to the tax notice, but her clarifications were rejected by the tax assessing officer (AO) by reading Section 14A with Rule 8D, and a disallowance of ₹4.60 crore was calculated, increasing her assessed income for the fiscal to ₹43.44 crore.
• The case was referred to the Commissioner of Income Tax (Appeals) [CIT(A)] which have the actor relief, but it was further taken to ITAT by the tax department, the report added.

What were the claims made by each side?

Aishwarya Rai Bachchan's side argued that her detailed reply to the tax notice was dismissed and due consideration was not given to her response. The counsel also said that the actor's total expenses were ₹2.48 crore, against the AO's much higher ₹4.60 crore disallowance, as per the report.

For the I-T department, the lawyer said that the AO had correctly invoked Section 14A read with Rule 8D and had documented his satisfaction.

The ITAT in its October 31, 2025 ruling, said that the AO rejected Rai Bachchan's calculations without looking at particulars under investments and actual generated income, it also acknowledged the disproportion between total expenses and disallowance as “unreasonable”, the report added.

It also used precedence from the Supreme Court's 2018 decision in Maxopp Investments, where the AO was required to record satisfaction as to why the taxpayer's disallowance is not acceptable before invoking Rule 8D, which the tribunal pointed the officer in this case failed to do.

What is Section 14A?

According to IndiaFilings, Section 14A of the Income Tax Act, 1961 “is a legal provision which lays down the law in relation to expenses incurred by a taxpayer to earn an income which does not form a part of total income as per the provisions under the Act.”

It added that in such cases, the particular expenditure may not be allowed as a deduction while computing taxpayer Gross Total Income.