Deputy Commissioner Of Income ... vs M/S. Core Health Care Ltd

The Supreme Court addressed the issue of whether interest on borrowings for capital assets not put to use can be deducted under Section 36(1)(iii) of the Income-tax Act, 1961. The Court held that the provisions of Section 36(1)(iii) must be harmoniously construed with Explanation 8 to Section 43(1), and clarified that interest on borrowings for machinery not yet in use cannot be treated as revenue expenditure. Consequently, the Court upheld the decision of the Gujarat High Court, confirming the disallowance of Rs. 1,56,76,000/- as a deduction.