Interest on tax-linked borrowing is deductible when paid in the relevant year; earlier borrowing does not defeat the claim.

Interest paid in the relevant previous year on money borrowed to pay income-tax is deductible under section 80V where the borrowing was for payment of tax due under the Act. The timing of the loan itself is immaterial unless the statute expressly links deductibility to the year of borrowing. Because the borrowing was for tax payment and the interest was paid in the relevant year, the statutory conditions were satisfied and the deduction was allowable.

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Issues: Whether interest paid on money borrowed for payment of income-tax is deductible under section 80V of the Income-tax Act, 1961 when the borrowing was made in an earlier year but the interest was paid in the previous year relevant to the assessment year under consideration.

Analysis: Section 80V allows deduction of interest paid in the previous year on money borrowed for payment of any tax due under the Act. The provision requires that the interest must be paid in the relevant previous year and that the borrowing must be for payment of tax due under the Act. It does not require that the loan itself must have been taken in the previous year relevant to the assessment year. As the borrowing was for payment of income-tax and the interest was paid in the relevant previous year, the statutory conditions were satisfied.

Conclusion: The deduction under section 80V was allowable to the assessee and the disallowance was not sustainable.

Final Conclusion: The assessee succeeded on the principal claim for deduction of interest, resulting in partial allowance of the appeal.

Ratio Decidendi: Where a deduction provision requires interest paid in the relevant previous year on money borrowed for payment of tax due, the timing of the borrowing is immaterial unless the statute expressly makes it relevant.

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