Interest on borrowed fund - revenue expenditure

[subhash gupta]

An existing private limited company in transportation business wants to acqire another pvt.ltd. company doing tansportation business by utilising funds borrowed for this purpose. Whether interest paid on such borrowed funds is an allowable revenue expenditure under Income Tax Act.

[Surender Gupta]

There are number of contradictory judgments are available. Only a careful study would help to find a suitable solution.

AI Summary

Interest deductibility on acquisition loans questioned as allowable revenue expenditure under tax law amid conflicting precedents. Whether interest on funds borrowed by an existing private limited company to acquire another private limited company in the same business is an allowable revenue expenditure for tax purposes is the central question; judicial authorities are contradictory, and a careful study of precedent is required to determine the correct treatment in the particular facts.