https://www.taxtmi.com/caselaws?id=789033 Interest expenditure under section 36(1)(iii) cannot be disallowed merely because the assessee borrowed in Indian rupees at a higher rate while advancing a foreign currency loan to an overseas subsidiary at a lower rate. The transaction was accepted at arm's length, the comparable overseas lending rate was about 3% to 4%, and the 5% charge was within the arm's length range. The arrangement also generated foreign exchange gain that was offered to tax, and the record did not show lack of commercial expediency. In these circumstances, the borrowing cost could not be substituted to make a partial disallowance. en-us Wed, 25 Mar 2026 00:00:00 +0530 Thu, 02 Apr 2026 08:50:47 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=789033 Interest expenditure under section 36(1)(iii) cannot be disallowed merely because the assessee borrowed in Indian rupees at a higher rate while advancing a foreign currency loan to an overseas subsidiary at a lower rate. The transaction was accepted at arm's length, the comparable overseas lending rate was about 3% to 4%, and the 5% charge was within the arm's length range. The arrangement also generated foreign exchange gain that was offered to tax, and the record did not show lack of commercial expediency. In these circumstances, the borrowing cost could not be substituted to make a partial disallowance. Case-Laws Income Tax Wed, 25 Mar 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=789033