Additional Commissioner Of ... vs Cloth Traders (P.) Ltd. on 28 November, 1973
That was question NO. 2 before the Division Bench in Laxmi Agents P. Ltd.'s case [1980] 125 ITR 227 (Guj) and from p. 235 onwards of the report the second question before the Division Bench has been dealt with. In that part particular case, the facts were that borrowings were made only for the purpose of the assessee's business of managing a company. The assessee invested in the shares of the managed company with a view to protest its managing agency business and hence the main object of this investment was not to earn dividend, and if the borrowings were required to enable the assessee to purchase these shares, it must follow that the interest was paid on the capital borrowed for the purpose of business. The Division Bench observed (p. 238):