https://www.taxtmi.com/caselaws?id=181454 Interest paid on genuine capital borrowed for business was deductible in full under section 10(2)(iii) of the Income-tax Act, 1922. The borrowing was held to be real and for business purposes, and the lenders were treated as creditors, not as shareholders receiving dividend in that capacity. Linking the contractual interest rate to the dividend declared did not change the character of the payment, because it remained interest on borrowed capital. The taxing authority could not substitute a notional reasonable rate or reduce the deduction on the ground that the agreed rate was commercially high. The full interest actually paid was therefore allowable. en-us Wed, 19 Dec 1956 00:00:00 +0530 Mon, 18 Apr 2016 11:00:20 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=181454 Interest paid on genuine capital borrowed for business was deductible in full under section 10(2)(iii) of the Income-tax Act, 1922. The borrowing was held to be real and for business purposes, and the lenders were treated as creditors, not as shareholders receiving dividend in that capacity. Linking the contractual interest rate to the dividend declared did not change the character of the payment, because it remained interest on borrowed capital. The taxing authority could not substitute a notional reasonable rate or reduce the deduction on the ground that the agreed rate was commercially high. The full interest actually paid was therefore allowable. Case-Laws Income Tax Wed, 19 Dec 1956 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=181454