https://www.taxtmi.com/caselaws?id=36070 Interest paid on capital supplied by the Central and State Governments under the Road Transport Corporations Act, 1950 was held not deductible under section 36(1)(iii) of the Income-tax Act, 1961 because such capital was not "capital borrowed" for business purposes. The statutory scheme distinguished government capital "provided" from money "borrowed," and borrowing was understood to require a lending transaction with an enforceable obligation to repay. The mere liability to pay interest under the Act did not convert the governmental contribution into borrowed capital, and the liquidation provisions also indicated a capital subscription rather than a loan. The deduction was therefore denied. en-us Fri, 06 Feb 1981 00:00:00 +0530 Thu, 07 Mar 2024 14:58:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=36070 Interest paid on capital supplied by the Central and State Governments under the Road Transport Corporations Act, 1950 was held not deductible under section 36(1)(iii) of the Income-tax Act, 1961 because such capital was not "capital borrowed" for business purposes. The statutory scheme distinguished government capital "provided" from money "borrowed," and borrowing was understood to require a lending transaction with an enforceable obligation to repay. The mere liability to pay interest under the Act did not convert the governmental contribution into borrowed capital, and the liquidation provisions also indicated a capital subscription rather than a loan. The deduction was therefore denied. Case-Laws Income Tax Fri, 06 Feb 1981 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=36070