https://www.taxtmi.com/caselaws?id=465074 ITAT Chennai allowed the assessee's appeal and deleted the disallowance of interest under s. 36(1)(iii). The AO had disallowed interest on borrowed funds used to invest in shares of subsidiary companies, treating it as diversion of interest-bearing funds for non-business purposes. ITAT held that, since the subsidiaries were engaged in the same line of business and the investments were made for strategic and commercial expediency, the borrowed capital was used for business purposes. The AO could not substitute its business judgment for that of the assessee. Consequently, interest on such borrowings was held fully deductible under s. 36(1)(iii). en-us Wed, 15 Feb 2023 00:00:00 +0530 Thu, 04 Dec 2025 19:01:18 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=465074 ITAT Chennai allowed the assessee's appeal and deleted the disallowance of interest under s. 36(1)(iii). The AO had disallowed interest on borrowed funds used to invest in shares of subsidiary companies, treating it as diversion of interest-bearing funds for non-business purposes. ITAT held that, since the subsidiaries were engaged in the same line of business and the investments were made for strategic and commercial expediency, the borrowed capital was used for business purposes. The AO could not substitute its business judgment for that of the assessee. Consequently, interest on such borrowings was held fully deductible under s. 36(1)(iii). Case-Laws Income Tax Wed, 15 Feb 2023 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=465074