M/S. THIRUVALLUVAR TEXTILES PVT. LTD.,RASIPURAM vs. ACIT, CENTRAL CIRCLE-1(1), CHENNAI

ITA 1736/CHNY/2025Status: DisposedITAT Chennai04 November 2025AY 2016-17Bench: SHRI GEORGE GEORGE K (Vice President), SHRI S.R.RAGHUNATHA (Accountant Member)40 pages
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What did the Tribunal hold?

The Tribunal held that the valuation report from the statutory auditor was not permissible under Rule 11UA. However, it also found that the CIT(A) erred in rejecting the NAV method solely based on the market value of land instead of book value.

What were the facts?

The assessee company invested in its wholly owned subsidiary and paid interest on borrowed capital. The Assessing Officer disallowed proportionate interest on the grounds of diversion of funds for non-business purposes. An addition was also made under Section 56(2)(viib) for share premium received.

What were the issues?

Whether interest on borrowed funds invested in a subsidiary is allowable as a business expenditure, and whether the valuation of shares for the purpose of Section 56(2)(viib) was correctly determined.

Which sections of the Income-tax Act were involved?

Section 56(2)(viib)

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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R.RAGHUNATHA

For Respondent: Shri. Shiva Srinivas, CIT
Hearing: 03.09.2025Pronounced: 04.11.2025

PER S. R. RAGHUNATHA, AM :

These four appeals filed by the assessee are directed against separate orders passed by the learned Commissioner of Income Tax, Appeal, CIT(A), Chennai - 18, both dated 26.05.2025 for assessment years 2013-14, 2014-15, 2016-17 & 2017-18 respectively. Since, facts are identical and issues are common, for the sake of convenie

The order continues below.

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