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2015 (4) TMI 103 - HC - Income TaxClosure of business - disallowance of interest paid for only one year - waiver of interest for the remaining four years as per the settlement - Held that:- In the instant case, the borrowed funds were utilized exclusively for the purpose of business and interest was capitalized thereupon and it was the business liability of the assessee to pay the same. The assessee, being the prudent businessman, has entered into settlement to clear the debt by paying the interest only for one year. The remaining interest was waived off by the creditors, so we are of the view that the amount of ₹ 1,22,134/- was paid exclusively for the purpose of business and the same is allowable deduction. The interest paid on the borrowed capital for the purpose of business is deductable under Section 36(1)(iii) as per the ratio laid down in the case of CIT vs. L.G. Balakrishnan & Bros (P.) (1973 (9) TMI 5 - MADRAS High Court ) - Decided in favour of assessee.
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