1972 (1) TMI 8 - HC - Income Tax

Deduction allowed for business interest expense despite lower lending rate.

The High Court of Madras ruled in favor of the assessee in a reference under section 66(1) of the Income-tax Act, 1922. The court held that interest paid ... Borrowed Capital – difference in interest paid and interest received on lending - entire interest paid is deductible under section 10(2)(iii) of Indian Income-tax Act, 1922 The High Court of Madras ruled in favor of the assessee in a reference under section 66(1) of the Income-tax Act, 1922. The issue was whether interest payment of Rs. 12,413 for the assessment year 1960-61 should be disallowed. The court held that the interest paid on borrowed capital for business purposes should be allowed as a deduction under section 10(2)(iii) of the Act, even if the interest rate on lending was lower. The court cited a similar decision by the Madhya Pradesh High Court in Birla Gwalior Private Ltd. v. Commissioner of Income-tax.