https://www.taxtmi.com/caselaws?id=16079 The dominant issue was whether interest on borrowed capital was deductible under s. 36(1)(iii) where the borrowings were routed as an "investment" in a subsidiary but, in substance, funded another company's construction activity. The HC held that the apparent interposition of a separate legal entity was not decisive; the corporate veil could be lifted to ascertain the real character of the transaction where a device was used to evade tax. On the facts, the sum was an advance diverted for the benefit of a third party and not used for the assessee's business or profession, so the interest was not allowable. The Tribunal's deletion of disallowance was set aside; the reference was answered for the Revenue. en-us Wed, 25 Feb 1998 00:00:00 +0530 Tue, 30 Dec 2025 17:46:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=16079 The dominant issue was whether interest on borrowed capital was deductible under s. 36(1)(iii) where the borrowings were routed as an "investment" in a subsidiary but, in substance, funded another company's construction activity. The HC held that the apparent interposition of a separate legal entity was not decisive; the corporate veil could be lifted to ascertain the real character of the transaction where a device was used to evade tax. On the facts, the sum was an advance diverted for the benefit of a third party and not used for the assessee's business or profession, so the interest was not allowable. The Tribunal's deletion of disallowance was set aside; the reference was answered for the Revenue. Case-Laws Income Tax Wed, 25 Feb 1998 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=16079