Aishwarya Rai Bachchan Vs DCIT (ITAT Mumbai)
The appeal was filed against an order dated 16.06.2025 passed under Section 250 of the Income Tax Act, 1961 by the National Faceless Appeal Centre for Assessment Year 2020–21. The assessee challenged disallowances confirmed by the CIT(A), primarily relating to (i) interest expenditure under Section 57 and (ii) forecasting expenses treated as personal in nature.
Regarding the first issue, the assessee had claimed interest expenditure of ₹1,49,52,658 on a loan taken from Deutsche Bank, asserting that the borrowed funds were used for investments in venture capital funds (VCF), which generated income taxable under “Income from other sources.” The Assessing Officer disallowed the claim on the ground that the assessee failed to establish a nexus between the borrowed funds and such investments. It was also observed that the assessee held substantial investments in personal and capital assets and had not demonstrated that borrowed funds were not used for those purposes. The CIT(A) upheld the disallowance, citing lack of documentary evidence such as loan agreements, fund utilization details, and fund flow statements.
Upon consideration, the Tribunal noted that the loan was taken in December 2016 and investments increased significantly during the same period. It also observed that similar interest expenditure had been allowed by the Assessing Officer in earlier assessment years, including AY 2016–17, 2017–18, 2018–19, and 2019–20. Applying the principle of consistency, the Tribunal held that in the absence of any change in facts, such disallowance was not justified in the year under consideration. Further, it concluded that where incremental investments exceeded the loan amount, it established utilization of borrowed funds for investment purposes. The Tribunal also accepted the explanation that the loan was repaid before 31.03.2020, which is why no outstanding loan appeared in the balance sheet. Accordingly, the disallowance under Section 57 was directed to be deleted.
