The Bombay High Court has admitted an appeal filed by the Income Tax authorities, challenging relief granted to Bollywood star Aishwarya Rai Bachchan by Income Tax Appellate Tribunal (ITAT).

A Division Bench headed by Justice S Radhakrishnan admitted the appeal by IT authorities over Aishwarya's tax assessment for the financial year 1996-1997.

The IT authorities moved to HC following ITAT's last year decision quashing an IT department decision to reopen Aishwarya's tax assessment.

IT Department's lawyer Benny Chatterjee argued that Aishwarya's income is not being questioned, but her getting exemption under NRI category is questionable.

The key issue is whether Aishwarya - who had won Miss World title just then - could claim to be a Non Resident Indian for that period, he added.

Aishwarya had declared her taxable income for the the FY 1996-97 to be 2.14 lakh. But in 2003, the authorities decided to reopen the assessment, as her passport revealed that during the period she was not an NRI, as she had claimed to be.

She was not outside the country for 186 days within that period, as required to qualify for income tax exemption under the NRI category, authorities said.

Therefore, she was asked to pay tax on the income of around Rs 26 lakh which she had earned abroad-after winning the beauty pageant with interest, they added.