आयकर अपीलीय अिधकरण, ’डी’ (cid:1)यायपीठ, चे(cid:9)ई।

IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI (cid:1)ी एबी टी. वक(cid:10), (cid:11)ाियक सद(cid:17) एव ं

(cid:1)ी अिमताभ शु(cid:24)ा, लेखा सद(cid:9) के सम(cid:27)

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.2110 & 2111/Chny/2025 िनधा(cid:14)रण वष(cid:14)/Assessment Years: 2013-14 & 2014-15 The DCIT, v. Thiruvalluvar Textiles-

Central Circle-1(1), Pvt. Ltd., Chennai. No.2-9, Singalandapuram Pirivu Road, Koneripatty Rasipuram, Namakkal District-637 408.

[PAN: AAACT 9934 H (अपीलाथ(cid:22)/Appellant) ((cid:23)(cid:24)यथ(cid:22)/Respondent)

Department by : Mr.Y. Sridhar, FCA Assessee by : Mr.Saujanya Ranjan, IRS सुनवाईक(cid:28)तारीख/Date of Hearing : 23.09.2025 घोषणाक(cid:28)तारीख /Date of Pronouncement : 24.10.2025 आदशे / O R D E R PER ABY T. VARKEY, JM:

These are Revenue appeals against the order of the Learned Commissioner of Income Tax (Appeals), (hereinafter referred to as “the Ld.CIT(A)”), Chennai-18, dated 26.05.2025 for the Assessment Year (hereinafter referred to as "AY”) 2013-14 & 2014-15.

2. The main grievance of the Revenue in both the appeals is against the action of the Ld.CIT(A) allowing the appeal preferred by the assessee/deleting the disallowance made by the AO u/s.14A of the Income Tax Act, 1961 (hereinafter referred to as "the Act”). Since, both sides agreed that this is the only issue involved in both the appeals and the facts involved are similar/identical, therefore, decision in one of the appeal would decide the fate of the other. Therefore, we take up the appeal for AY 2013-14 as lead case, the decision of which will be followed for AY 2014-15.

3. The brief facts pertaining to the issue regarding disallowance made by the AO u/s.14A of the Act r.w.r.8D of the Income Tax Rules, 1962 (hereinafter referred to as ‘the Rules‘) are that the AO during the course of assessment proceedings, noted that assessee had invested a sum of ₹29,22,46,913/- in shares as on 31.03.2013 and hadn’t claimed any expenses relatable to such expenses u/s.14A of the Act. Therefore, he asked the assessee ‘as to why’ the provisions of Sec.14A r.w.r.8D shouldn’t be invoked. Pursuant thereto, the assessee replied that the assessee company didn’t earn any dividend income [exempt income] from the investment made by the assessee company and therefore, it didn’t disallow any expenditure on this issue. The AO not being satisfied with the explanation, invoked Rule 8D and disallowed an amount of ₹3,42,77,243/- u/s.14A of the Act for AY 2013-14 & similar action was done for AY 2014-15.

4. Aggrieved, the assessee preferred appeals before the Ld.CIT(A) who found that the assessee didn’t earn any exempt income from the investment made during the relevant assessment years and accordingly, held that no disallowance u/s.14A of the Act was warranted. For such a proposition, he cited the decision of the Hon’ble jurisdictional High Court in the case of MARG Ltd. v. CIT [2020] 120 taxmann.com 84 (Mad). Moreover, the Ld.CIT(A) noted that proportionate interest on the said investment was already disallowed. Hence, according to the Ld.CIT(A), when interest was already disallowed, again making disallowance u/s.14A of the Act would tantamount to double addition [refer Kolkata Tribunal’s decision in the case of ITO v. Snowtax Investment Ltd., ( 2015 )64 taxmann.com 157]. The Ld.CIT(A) noted that the facts involved in the Kolkata Tribunal case was that the disallowance was made u/s 36(1)(iii) as against 37(1) in the present case on hand. However, the Ld.CIT(A) noted that the disallowance of interest was the key issue, and therefore, he directed the AO to delete the disallowance of Rs.3,42,77,243/- made u/s 14A read with Rule 8D. Thus, the Ld.CIT(A) is noted to have directed deletion of addition of ₹3,42,77,243/- made u/s.14A r.w.r.8D primarily on the ground that the assessee didn’t earn any exempt income [refer the decision of the Hon’ble jurisdiction