<h1>Interest on loans for buying unused capital assets: deductible under section 36(1)(iii) or capitalized under section 43(1) Explanation 8</h1> Whether interest on loans taken to acquire capital assets is deductible under section 36(1)(iii) or must be capitalized under Explanation 8 to section 43(1) arises where assets are acquired but not put to use. The Supreme Court in several recent rulings held that section 36(1)(iii) is a self-contained code: interest on borrowings for the purpose of business is allowable as a revenue deduction irrespective of whether the funds bought a capital or revenue asset, distinguishing borrowing from investment. By contrast, a Punjab & Haryana High Court decision ruled that interest relating to acquisition of an asset must be capitalized until the asset is first put to use, disallowing the deduction.