Section 153A(1)(b) of the Income Tax Act

Interest expenditure cannot be disallowed under Section 36(1)(iii) for interest-free advances made to subsidiaries or group companies if the advances are from owned funds or are justified by commercial expediency.

Interest paid on borrowed capital is only deductible if the loans were utilized for the assessee's business during the accounting year. Any portion of interest related to non-business purposes is not allowable as an expenditure.

Where an assessee claims that investments were made from their own non-interest bearing funds, the onus is on them to establish this, particularly when funds are mixed.

A contrary Tribunal order is superseded by a High Court's view which was subsequently followed by another Tribunal bench.

Contracts involving development, operation, maintenance, financial involvement, and defect correction are eligible for deduction under section 80-IA(4), even when allotted by government bodies. Such contracts are not considered simple works contracts for the purpose of denying this deduction.

An auditor's qualification of expenditure as prior period expenditure does not automatically justify its reversal if the factual findings support its allowability.

Interest on borrowed funds is not deductible to the extent funds are diverted for non-business purposes, even if the diversion is not illegal but contrary to public policy or government policy. The court considers the reality that borrowings would have been less without such diversions.

Expenditure incurred in a prior period, but crystallising in the current assessment year upon receipt of bills, is allowable as a deduction.

When an assessment comes before an Appellate Assistant Commissioner (AAC), their jurisdiction extends to the entire assessment, not just the issues raised by the assessee. The AAC can correct errors made by the Income Tax Officer (ITO) even on matters not appealed by the assessee.