ITAT allowed the assessee's claim for interest expense deduction...

ITAT allowed the assessee's claim for interest expense deduction under Section 36(1)(iii) regarding funds borrowed through debenture issuance for land purchase. The assessee temporarily invested idle funds in mutual funds and fixed deposits during a seven-day interim period between fund raising and land payment. The tribunal held this constituted an adventure in the nature of business under Section 2(13), undertaken for commercial expediency to offset interest costs rather than capital appreciation. However, ITAT directed partial disallowance under Section 14A for interest expenses attributable to investments yielding exempt dividend income of INR 4,54,581 from the total interest expense of INR 1,56,06,164. The assessing officer must provide reasonable hearing opportunity and allow the remaining deduction after Section 14A disallowance calculations.