Borrowed Funds Scrutiny: Direct Investment Validates Interest Expense Claim Under Section 57(iii)

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....ITAT adjudicated a tax dispute regarding interest expense disallowance under Section 57(iii). The tribunal examined the assessee's loan transactions, noting borrowed funds exceeded loans advanced. Despite initially computing proportionate interest expense as disallowed, the tribunal ultimately ruled in the assessee's favor. The decision hinged on the direct investment of borrowed funds into a company and corresponding interest adjustment. Relying on precedent from a prior assessment year, the ITAT found the Assessing Officer's addition unsustainable, thereby granting relief to the assessee and confirming the proportionate interest expense treatment.....