Assessing Officer held that  borrowed funds were utilized by assessee for non-business purposes i.e. investments in mutual funds and FDR’s and thus was not allowable as deduction. CIT(A) allowed the deduction which was affirmed by the Tribunal  on the ground that  the assessee was under contractual restrictions in respect of utilization of borrowed funds; and was also liable to pay substantial amount of liquidation damages/pre-payment charges in case it made a prepayment of loan repayments. Due to contractual restrictions and liquidation damages/pre-payment charges, it was neither prudent for assessee to divert any part of borrowed funds for non-business purposes nor was it prudent to make pre-payment of loan even if assessee had its own interest free funds.  On appeal by the Revenue the Court held that in absence of any contrary material on record, deduction claimed by assessee under section 36(1)(iii) was to be allowed for relevant year.  (AY.  2013-14, 2014-15)