BOMBAY STEAM NAVIGATION CO. (1953) PRIVATE LTD. vs COMMISSIONER OF INCOME-TAX, BOMBAY

The Supreme Court ruled that interest paid on an unpaid balance of the purchase price for business assets is not deductible under Section 10(2)(iii) of the Income Tax Act, 1922, as it does not constitute a loan. The Court clarified that while interest on borrowed capital is deductible, an agreement to pay a balance does not create a loan. The claim for deduction was disallowed, affirming the High Court's decision, with the interest deemed a permissible deduction under Section 10(2)(xv).