https://www.taxtmi.com/highlights?id=96021 Alleged diversion of borrowed funds to non-business partner advances was examined; the analysis emphasised that proof of diversion of borrowings is required and that admitted interest receipts and charging of interest on partners' debit balances can neutralise claims of private use. The presence of substantial interest-free funds and lack of nexus between specific borrowings and advanced sums negated the link necessary for disallowance. On that basis, the challenge to the s.36(1)(iii) disallowance failed and the appeal in favour of the taxpayer was allowed. en-us Wed, 14 Jan 2026 11:56:31 +0530 Wed, 14 Jan 2026 11:56:31 +0530 TaxTMI RSS Generator https://www.taxtmi.com/highlights?id=96021 Alleged diversion of borrowed funds to non-business partner advances was examined; the analysis emphasised that proof of diversion of borrowings is required and that admitted interest receipts and charging of interest on partners' debit balances can neutralise claims of private use. The presence of substantial interest-free funds and lack of nexus between specific borrowings and advanced sums negated the link necessary for disallowance. On that basis, the challenge to the s.36(1)(iii) disallowance failed and the appeal in favour of the taxpayer was allowed. Highlights Income Tax Wed, 14 Jan 2026 11:56:31 +0530 https://www.taxtmi.com/highlights?id=96021