https://www.taxtmi.com/caselaws?id=268505 The SC held that the deduction of interest paid on borrowed funds under Section 36(1)(iii) could not be disallowed merely because the loans were advanced to directors or a sister concern. The Court found the HC erred by ignoring evidence that the advances were business expedient, given the undertaking to financial institutions to support working capital. The assessee's subsequent repayment of loans with interest, which was declared as income, further supported the business purpose. Regarding advances to directors, the assessee had sufficient reserves and credit balance, negating any diversion of borrowed funds. The SC ruled in favor of the assessee, allowing the interest deduction. en-us Thu, 05 Nov 2015 00:00:00 +0530 Wed, 08 Jul 2026 10:31:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=268505 The SC held that the deduction of interest paid on borrowed funds under Section 36(1)(iii) could not be disallowed merely because the loans were advanced to directors or a sister concern. The Court found the HC erred by ignoring evidence that the advances were business expedient, given the undertaking to financial institutions to support working capital. The assessee's subsequent repayment of loans with interest, which was declared as income, further supported the business purpose. Regarding advances to directors, the assessee had sufficient reserves and credit balance, negating any diversion of borrowed funds. The SC ruled in favor of the assessee, allowing the interest deduction. Case-Laws Income Tax Thu, 05 Nov 2015 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=268505