M/S. VEECUMSEES, MADRAS vs COMMISSIONER OF INCOME TAX, MADRAS

The Supreme Court addressed the interpretation of Section 36(1)(iii) of the Income Tax Act, 1961, concerning the deductibility of interest on loans taken for constructing a cinema theatre. The Court held that since the loans were taken for business purposes and the theatre was operated as part of the assessee's business until its sale, the interest should be allowed as a deduction despite the cessation of the theatre's operation. The Court upheld the Appellate Tribunal's decision, affirming that the business activities were composite and interconnected.