Commercial expediency supports interest deduction where overseas investments are made for business expansion and raw material security.

Interest on borrowings used to invest in overseas group companies was treated as revenue expenditure because the investment was made for business expansion and to secure essential raw materials for the assessee's fertilizer business. The earlier findings on commercial expediency and business purpose had already attained finality on the relevant facts, and the Revenue could not justify a different view for the year in question. On that basis, the challenge to the miscellaneous petition raised no independent substantial question of law, and the Revenue's appeal failed.

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Issues: Whether interest on funds used for investment in the overseas group companies was allowable as revenue expenditure under section 36(1)(iii) of the Income-tax Act, 1961.

Analysis: The investment was found to be part of the assessee's business expansion and was directed towards securing basic raw materials essential to its fertilizer business. The earlier Tribunal findings on commercial expediency and business purpose had attained finality for the relevant factual matrix, and the Revenue had no justification to take a different view for the assessment year in question. In that backdrop, the challenge to the dismissal of the miscellaneous petition did not raise any independent substantial question of law.

Conclusion: The interest was allowable as revenue expenditure, and the Revenue's appeal failed.

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