INCOME TAX ACT, 1961

--Business deduction under section 36(1)(iii).--interest on borrowed capital. Assessee utlizing borrowed Funds to subscribe to equity capital of subidiary company.--Assessee had borrowed certam funds which were utilized by it to subscribe to equity capital of subsidiary company which used funds for acquiring hotel. Assessing officer disallowed interest deduction claimed by assessee. CIT(A) reversed decision of assessing officer. Tribunal confirmed it. Held Assessee was in business of owning hotel reinning and managing hotels. For ettective control of new hotels acquired by assessee under its management it had invested in a wholly owner subsidiary. Thus assessee was netitled to deduction of innterest on borrowed funds under section 36(1)(iii). No question of law arose.

Income Tax Act, 1961 36(1)(iii)

IN THE DELHI HIGH COURT

A.K. SIKRI & M.L. MEHTA JJ.

CIT v. Tulip Star Hotels Ltd.