STATE OF MADRAS vs C. J. COELHO

The Supreme Court ruled that interest paid on borrowed funds for the purchase of a plantation is deductible under Section 5(e) of the Madras Plantations Agricultural Income-tax Act. The Court held that such interest constitutes revenue expenditure rather than capital expenditure, as it does not create a new asset or provide enduring benefits. The Court affirmed the High Court's decision that the entire interest amount of Rs. 22,628-9-9 should be deducted from the assessable income, emphasizing that the expenditure was wholly and exclusively for the plantation's purpose.