SC To Reconsider Verdict In S. A. Builders on allowability of Interest paid to acquire equity capital of subsidiary company

The respondent-assessee had borrowed certain funds which were utilized by the assessee to subscribe to the equity capital of the subsidiary company, namely, M/s. Tulip Star Hospitality Services Ltd. This subsidiary company used the said funds for the purpose of acquiring the Centaur Hotel, Juhu Beach, Mumbai, which is now functioning as “The Tulip Star , Mumbai”. The assessee paid interest on the borrowed money. This interest liability incurred by the assessee was claimed by it as deduction on the ground that it was business expenditure. The Assessing Officer (AO) refused to allow ...