Interest cannot be disallowed for mere advancing of Interest-free advances to third parties

PCIT Vs Reebok India Company (Delhi High Court) The Supreme Court in A. Builders Ltd. Versus Commissioner of Income Tax (Appeals) Chandigarh And Another, (2007) 1 SCC 781, had interpreted section 36(1)(iii) of the Act to observe that interest paid on capital borrowed for the purpose of business is to be allowed as a deduction in computing taxable income. The expression “for purposes of business or profession” occurring in Section 36(1)(iii) of the Act is wider in scope than the expression “for the purpose of earning income, profits or gains”. Accordingly, expenditure vo...