https://www.taxtmi.com/caselaws?id=788579 Interest disallowance under section 36(1)(iii) depends on whether borrowed funds were actually diverted for non-business use and whether sufficient own interest-free funds were available. Where the assessee has such funds, advances to sister concerns may not automatically justify disallowance, and the factual source of funds must be verified. The analysis also requires comparing interest paid on borrowings with interest recovered on advances to assess the net borrowing cost. Advances to directors and key managerial personnel stand on a different footing: in the absence of evidence of commercial expediency, interest attributable to such diversion is generally disallowable to the extent properly attributable. en-us Wed, 11 Mar 2026 00:00:00 +0530 Wed, 25 Mar 2026 08:49:07 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=788579 Interest disallowance under section 36(1)(iii) depends on whether borrowed funds were actually diverted for non-business use and whether sufficient own interest-free funds were available. Where the assessee has such funds, advances to sister concerns may not automatically justify disallowance, and the factual source of funds must be verified. The analysis also requires comparing interest paid on borrowings with interest recovered on advances to assess the net borrowing cost. Advances to directors and key managerial personnel stand on a different footing: in the absence of evidence of commercial expediency, interest attributable to such diversion is generally disallowable to the extent properly attributable. Case-Laws Income Tax Wed, 11 Mar 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=788579