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SC: Interest on Borrowed Funds Allowed Even for Investment Through Group Concerns – Commercial Expediency Prevails
Case Law Details
- Case Name
- L.K. Trust Vs CIT & Anr. (Supreme Court of India)
- Appeal Number
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- Courts
- Supreme Court of India
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L.K. Trust Vs CIT & Anr. (Supreme Court of India)
SC: Interest on Borrowed Funds Allowed Even for Investment Through Group Concerns – Commercial Expediency Prevails
The Supreme Court in held that interest paid on borrowed capital is allowable under Section 36(1)(iii) where the borrowing was for business purposes, even if the funds ultimately moved through a group concern for acquisition of shares.
The assessee-trust had borrowed ₹3.80 crore from Corporation Bank for purchase of shares of Shaw Wallace & Co. Ltd. The Revenue disallowed interest deduction of ₹21...
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