Interest Expenses Allowed When Investment in Subsidiary's Debentures Serves Business Purpose of Acquiring Controlling Interest

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....The ITAT dismissed the Revenue's appeal against disallowance of interest expenses. The Tribunal held that the assessee's investment in compulsory convertible debentures of Shreeniwas Cotton Mills Ltd., which increased its shareholding from 95.30% to 99.76%, was made to acquire controlling interest in its subsidiary and therefore constituted a business purpose. The assessee demonstrated that it had interest-free investment of Rs. 505.32 crores, presumed to be funded from non-interest bearing funds of OCD worth Rs. 450 crores. The ITAT affirmed the CIT(A)'s finding that investments made to acquire controlling interest in another company are considered to be for business purposes.....