https://www.taxtmi.com/caselaws?id=7575 Interest on borrowed capital is allowable as a business deduction where the borrowing was for business purposes and interest was actually paid. The fact that the assessee had outstanding balances from sister concerns, or could have reduced borrowings by recovering those amounts, was held irrelevant when there was no showing that the borrowed funds were diverted as loans to those concerns. The Bombay HC applied the test under section 10(2)(iii) and upheld deduction of the interest, rejecting the departmental disallowance. en-us Mon, 30 Jun 1969 00:00:00 +0530 Mon, 02 Mar 2009 13:45:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=7575 Interest on borrowed capital is allowable as a business deduction where the borrowing was for business purposes and interest was actually paid. The fact that the assessee had outstanding balances from sister concerns, or could have reduced borrowings by recovering those amounts, was held irrelevant when there was no showing that the borrowed funds were diverted as loans to those concerns. The Bombay HC applied the test under section 10(2)(iii) and upheld deduction of the interest, rejecting the departmental disallowance. Case-Laws Income Tax Mon, 30 Jun 1969 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=7575