HC allowed the appeal, set aside the ITAT order and answered the...

HC allowed the appeal, set aside the ITAT order and answered the substantial question in favour of the Assessee, holding that interest paid on borrowings used for lending to related concerns is allowable as a deduction against interest income for AY 1992-93. The Court held that "commencement of business" for Income Tax purposes occurs once preparatory acts (e.g. repairing/furnishing to make premises lettable) or financing activities are undertaken, and that lending constituted the Assessee's business (as per its MOA) rather than a fortuitous transaction. The HC reconciled the 1992-93 assessment with unchallenged findings for subsequent years and directed that interest expenditure be set off against interest receipts.

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