Interest on funds borrowed for acquiring controlling interest not allowable expenditure under the Income Tax Act

The Taxpayer incurred interest expenditure on the funds borrowed for investing in shares of a company, with a view to acquire controlling interest. The ITAT held that the interest expenditure incurred is not allowable under Section 57(iii)(Section) of the Indian Tax Law (ITL), since it is not incurred ‘wholly and exclusively’ for the purpose of earning dividend income.

Background and facts of the case

• The Section provides for deduction of revenue expenditur

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