https://www.taxtmi.com/caselaws?id=55134 A reduction in interest charged to a debtor concern was treated as a colourable device to divert the assessee-firm's income. The analysis accepted that tax authorities cannot dictate the precise commercial rate of interest, but held that contractual freedom in fixing interest cannot be used to defeat revenue by shifting income under an artificial arrangement. On the facts noted, the lower lending rate was linked to the partner's joining the debtor concern, while the assessee itself continued borrowing at a higher rate, and the interest difference was sustained as an addition. en-us Fri, 22 Jun 1990 00:00:00 +0530 Tue, 23 Nov 2010 17:42:12 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=55134 A reduction in interest charged to a debtor concern was treated as a colourable device to divert the assessee-firm's income. The analysis accepted that tax authorities cannot dictate the precise commercial rate of interest, but held that contractual freedom in fixing interest cannot be used to defeat revenue by shifting income under an artificial arrangement. On the facts noted, the lower lending rate was linked to the partner's joining the debtor concern, while the assessee itself continued borrowing at a higher rate, and the interest difference was sustained as an addition. Case-Laws Income Tax Fri, 22 Jun 1990 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=55134