COMMISSIONER OF INCOME-TAX, MADRAS vs INDIAN BANK LID.

The Supreme Court held that under Section 10(2)(iii) of the Indian Income-tax Act, 1922, interest paid on money borrowed for investment in tax-free securities is deductible as a business expense. The Court emphasized that the language of the statute does not impose a requirement that the expenditure must directly produce taxable income. The appeal by the Revenue was dismissed, affirming the High Court's decision in favor of the assessee.