Dismissing the appeal of the revenue the Court held that ; company engaged in business of manufacture and sale of fruit juice and like products entered into an agreement for setting-up of joint venture company with a Central Government agency and a State Government entity was well within purview of business operations of assessee . Accordingly interest paid on funds borrowed by assessee had to be regarded as a payment made for purpose of business of assessee and a permissible deduction. ( AY. 2001-01 , 2003 -04)
CIT v. Keventer Agro Ltd. (2018) 256 Taxman 437 (Cal) (HC)
S. 36(1)(iii) :Interest on borrowed capital -Manufacture and sale of fruit juice and like products- Joint venture company for production of milk -Interest borrowed for setting up of joint venture is held to be allowable as deduction.