ACIT Vs Aishwarya Rai Bachchan (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai delivered its order in the case of ACIT vs Aishwarya Rai Bachchan concerning the applicability of disallowance under Section 14A of the Income-tax Act, 1961 read with Rule 8D for Assessment Year (A.Y.) 2022–23. The Revenue had filed an appeal against the order of the Commissioner of Income Tax (Appeals), Mumbai/National Faceless Appeal Centre (NFAC), Delhi, dated June 16, 2025, which granted relief to the assessee.
The Assessing Officer (AO) had proposed a disallowance under Section 14A in relation to expenses allegedly incurred in earning exempt income. The assessee filed her return of income for A.Y. 2022–23 on October 22, 2022, declaring a total income of ₹39,33,02,240. The case was selected for complete scrutiny. During the assessment proceedings, the assessee explained that she had already made a suo-moto disallowance of ₹49,08,657 under Section 14A, despite having incurred no expenditure specifically for earning exempt income. However, the AO rejected this explanation and proceeded to apply Rule 8D to compute disallowance.
Based on the AO’s computation, the total value of investments earning tax-free income was ₹9,21,26,77,726, with an average investment value of ₹4,60,63,38,863. The AO applied a disallowance rate of 1% on the average value, arriving at ₹4,60,63,388. After adjusting the assessee’s suo-moto disallowance of ₹49,08,657, the AO made an additional disallowance of ₹4,11,54,731 under Section 14A. The assessment was finalized under Section 143(3) at an income of ₹43,44,56,971 by order dated March 16, 2024.
