https://www.taxtmi.com/caselaws?id=217879 In the absence of any specific thin capitalisation rule in India, interest on borrowings could not be disallowed merely by re-characterising debt as equity. The revenue treated the assessee's borrowings as capital in substance because of the high debt-equity ratio, but the Tribunal found no governing provision at the relevant time authorising such reclassification. The Bombay High Court agreed that, without an applicable statutory thin capitalisation framework, the interest paid on debt capital remained deductible and could not be denied on that basis. The issue was therefore decided in favour of the assessee and against the revenue. en-us Thu, 30 Aug 2012 00:00:00 +0530 Wed, 08 Jul 2026 16:49:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=217879 In the absence of any specific thin capitalisation rule in India, interest on borrowings could not be disallowed merely by re-characterising debt as equity. The revenue treated the assessee's borrowings as capital in substance because of the high debt-equity ratio, but the Tribunal found no governing provision at the relevant time authorising such reclassification. The Bombay High Court agreed that, without an applicable statutory thin capitalisation framework, the interest paid on debt capital remained deductible and could not be denied on that basis. The issue was therefore decided in favour of the assessee and against the revenue. Case-Laws Income Tax Thu, 30 Aug 2012 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=217879