S.A. Builders Ltd. v CIT and another (SC) [2007 (288) ITR 1] (14/12/2006)

Income Tax Act, 1961, s. 36 (1) (iii) – Held, we have to see the transfer of the borrowed fundscommercial expediency and not from the point of view whether the amount was advancedfor earning profits - where it is obvious that a holding company has a deep interest in its subsidiary, and hence if the holding company advances borrowed money to a subsidiary and the same is used by the subsidiary for some business purposes, the assessee wouldordinarily be entitled to deduction of interest on its borrowed loans - Set aside the impugnedjudgments and remand the matter to the Tribunal for a fresh decision, in accordancewith law - Appeal Allowed.