https://www.taxtmi.com/caselaws?id=471077 Interest expenditure on borrowings used to advance funds generating taxable interest income is deductible under Section 57(iii) where a reasonable and proximate nexus exists between the expenditure and the income-earning purpose. The relevant test is the dominant purpose of incurring the expenditure, not whether income arises in the same accounting period. Where accounts establish that borrowed funds were advanced to entities from which interest income was earned and offered to tax, and the remaining interest cost was capitalised, the corresponding interest expense is allowable. The expenditure's genuineness and factual linkage must not be disproved. en-us Wed, 04 Feb 2026 00:00:00 +0530 Wed, 19 Aug 2026 18:58:24 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=471077 Interest expenditure on borrowings used to advance funds generating taxable interest income is deductible under Section 57(iii) where a reasonable and proximate nexus exists between the expenditure and the income-earning purpose. The relevant test is the dominant purpose of incurring the expenditure, not whether income arises in the same accounting period. Where accounts establish that borrowed funds were advanced to entities from which interest income was earned and offered to tax, and the remaining interest cost was capitalised, the corresponding interest expense is allowable. The expenditure's genuineness and factual linkage must not be disproved. Case-Laws Income Tax Wed, 04 Feb 2026 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=471077