The assessee had taken an office premises on leave and license by providing an interest-free security deposit, funded partly through Inter Corporate Deposits (ICDs) on which interest was paid. The AO disallowed the deduction of interest expense on the security deposit under section 36(1)(iii). CIT(A) allowed the claim of the aassessee. On appeal the ITAT upheld the CIT(A) order stating that the transaction was genuine, commercially prudent and not with a related party. Since the higher deposit ensured lower rent and a pre-emptive right to purchase the property, it can be said to be used for business purposes. Further, it held that the AO could not question the business decision of the assessee as long as the business purpose was established. (ITA No. 1389/ 1396 /Mum/2025   dt. 28 -5 2025)   (AY.2013-14,  2014-15 )