JUDGMENT N. Kumar , J.—As common question of law is involved in all these appeals and the assessee is also same but they pertain to different assessment years, they are taken up together for consideration and disposed of by this common order. 2. These appeals are filed by the revenue challenging the order passed by the Tribunal which has upheld the order of the Appellate Commissioner allowing deduction of interest under Section 36(1)(iii) of the Income-tax Act, 1961. 3. The assessee is in the business of rendering technical service. During the relevant year the assessee company had entered into an arrangement with Dana Corporation of USA for doing business together of manufacturing automobile ancillary and component for automobile Industry in India. For this purpose they had formed a company by the name Spicer India Limited. As per the arrangement between Dana Corporation, USA and Anand Group of Industries - the assessee company belongs to this group of companies - Dana Corporation. USA and Anand Group acquired shares of M/s Spicer India Limited in the ratio of 74.9 % and 25.1 % respectively. The assessee company invested Rs.2.22 crores in the share capital of M/s. Spicer India Limited during the assessment year 1995-96. The investment was financed by the loan of Rs.2 crores taken by the assessee company from Karnataka State Industrial Development Corporation. The assessee paid a sum of Rs.8,29,041/- towards interest for the aforesaid loan of Rs.2 crores borrowed. The assessee claimed the said amount as business expenditure under Section 36(1)(iii) of the Act. The assessing authority disallowed the said expenditure on the ground that the loan of Rs.2 crores borrowed is neither for its business purpose nor for investment purpose. In the business carried on by the assessee company it is borrowed for acquiring working capital of the company M/s Spicer India Limited and therefore it is not allowable. 4. Aggrieved by the same, the assessee preferred an appeal to the Commissioner of Income- tax (Appeals). The Appellate Commissioner held that there is a direct nexus between the purchase of shares in M/s. Spicer India Limited and the assessee's business. Section 36(1)(iii) which deals with allowability of interest casts a very limited obligation on the assessee to prove that the monies were borrowed for the purpose of business of the assessee. The Appellate Commissioner held that there is a direct nexus between the purchase of shares in M/s. Spicer India Limited and the assessee's business. Section 36(1)(iii) which deals with allowability of interest casts a very limited obligation on the assessee to prove that the monies were borrowed for the purpose of business of the assessee. It is an established proposition that it is immaterial whether the monies borrowed are utilised for incurring capital expenditure or revenue expenditure. Section 36(1)(iii) is neutral on this count - the only requirement is that monies have been utilised for the purpose of business. The monies were borrowed for the purpose of the business of the assessee and money was used for acquisition of shares. Therefore, the expenditure by way of interest is allowable under Section 36(1)(iii) and therefore it set aside the order of the assessing authority and allowed the deduction. 5. Aggrieved by the same, the revenue preferred an appeal to the Tribunal. The Tribunal held the assessee has clearly established that investment in shares were made for the purpose of business. As a result of such investment the assessee was able to get business not only from M/s. Spicer India Limited but also Dana Corporation in the subsequent years. The assessee was also benefited in creating Technology Resources Park on the same lines as done by Dana Corporation. Therefore, the investment made by the assessee was for the purpose of business. Therefore, it upheld the order passed by the Appellate Commissioner and held he was justified in allowing the deduction under Section 36(1)(iii). Aggrieved by the said order, the revenue is in appeal. 6. These appeals were admitted to consider the following substantial question of law:- Whether the Appellate authorities were right in holding that investment made by the assessee in M/s Spicer India would earn income in view of investment made by it was for the purpose of business and interest paid is allowable as deduction under Section 36(1)(iii) of the Income Tax Act? 7. Learned counsel for the revenue assailing the impugned order contends that, from the undisputed facts it is clear that, the assessee is carrying on the business of Technical Consultancy. Rs.2 crores borrowed is not invested in the business of technical service which is the business of the assessee. 7. Learned counsel for the revenue assailing the impugned order contends that, from the undisputed facts it is clear that, the assessee is carrying on the business of Technical Consultancy. Rs.2 crores borrowed is not invested in the business of technical service which is the business of the assessee. On the contrary the said amount was invested in acquiring 25.1 % of shades in M/s Spicer India Limited. Therefore, as the borrowed amount was not invested in the business of the assessee which he was carrying on, he is not entitled to claim the interest paid on the said borrowing as business expenditure under Section 36(1)(iii) of the Act. 8. Per contra, the learned counsel for the assessee supported the impugned order and contended that, it is not the requirement of law that the borrowed capital has to be invested in the business which the assessee is carrying on, on the date of borrowing. With that borrowal even if he carries on altogether different business it becomes the business of the assessee and consequently the interest paid towards discharge of the said loan is eligible for business expenditure under Section 36(1)(iii) of the Act. 9. In this connection it is useful to refer to the judgment of the Apex Court in the case of Commissioner of Income Tax, Kerala Vs. Malayalam Plantation Ltd., AIR 1964 SC 1722 , where the phrase "for the purpose of the business" in Section 10(2) (xv) of 1922 Act arose for consideration. The Apex Court held as under- 8.... The expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits". Its range is wide: it may take in not only the day to day running of a business but also the rationalization of its administration and modernization of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile title; it may also comprehend payment of statutory dues and taxes imposed as a pre-condition to commence or for carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. However wide the meaning of the expression may be, its limits are implicit in it. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for the carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business. It cannot include sums spent by the assessee as agent of a third party, whether the origin of the agency is voluntary or statutory; in that event, he pays the amount on behalf of another and for a purpose unconnected with the business. In the present case, the company, as a statutory agent of the deceased owners of the shares, paid the sums payable by the legal representatives of the deceased shareholders. The payments have nothing to do with the conduct of the business. The fact that on his default, if any in the payment of the dues the Revenue may realise the amounts from the business assets is a consequence of the default of the assessee in not discharging his statutory obligation, but it does not make the expenditure any the more expenditure inclined in the conduct of the business. It is manifest that the amounts in question were paid by the assessee as a statutory agent to discharge a statutory duty unconnected with the business, though the occasion for the imposition arose because of the territorial nexus afforded by the accident of its doing business in India. We therefore, hold that the estate duty paid by the respondent was not an allowable deduction under Section 10 (2)(xv) of the Act. We answer the question in the negative. The order of the High Court is wrong and is set aside. 10. This Court in the case of C.T. Desai Vs. Commissioner of Income Tax, Karnataka, (1979) 120 ITR 240 KAR held as under: 5....Under Section 36(1)(iii) of the Act, it is not necessary that the assessee must have used the business asset for doing business in the relevant accounting year; the spending of capital borrowed for purposes of acquisition of business asset, during the relevant accounting year is sufficient, for the entitlement, to the deduction of interest paid under Section 36(1)(iii) of the Act. 11. The Calcutta High Court in the case of Commissioner of Income Tax Vs. Jardine Henderson Ltd., (1994) 210 ITR 981 Cal held as under : - 6. 11. The Calcutta High Court in the case of Commissioner of Income Tax Vs. Jardine Henderson Ltd., (1994) 210 ITR 981 Cal held as under : - 6. The Tribunal found firstly that the assessee is not a dealer in shares. Nor does it carry on business in holding of investment. Its business is that of managing agency. Secondly, the shares held by the assessee were with a view to retain the managing agency and were also necessary for such retention. It, therefore, follows from this finding that the investment of borrowed money in these shares was for the purposes of the business of the assessee. Therefore, the borrowal itself was for the purposes of the business and that the interest paid was in respect of such borrowal. On those findings of fact it is not possible to draw a conclusion that the interest paid in respect of such borrowed funds utilised for investment in shares was not necessary to retain the managing agency and held with a view to retain such agency and is an expenditure laid out or expended wholly or exclusively for the purposes of making or earning dividend income. The Tribunal also found that the investment in shares was principally and primarily with a view to obtain the managing agency commission rather than the dividend income. The said fact is evident from the comparatively small amount of dividend which the assessee received compared to the large amount of managing agency commission which the assessee received during the various previous years. The bulk of the shares was held by the assessee with a view to have a firm grip over its managing agency business. The Tribunal, therefore, held in our view rightly that the interest paid is in respect of borrowal for the purposes of the business and that no portion of such interest paid could be said to be an expenditure wholly and exclusively laid out for the purposes of earning or making any dividend income. The dividend received is only an incidental benefit. The dividend received is only an incidental benefit. The finding of fact that the interest paid is in respect of the borrowal for the purposes of the business and no portion of such interest paid can be said to be an expenditure wholly and exclusively laid out for the purposes of earning or making dividend income has not been challenged by raising any appropriate question as to whether such finding is a perverse one or whether such finding is based upon any material or evidence. In that event, the said finding cannot be challenged otherwise. It is the categorical rinding of the Tribunal that the borrowal for the purpose of the shares was for the managing agency business of the assessee and to retain its grip over the managing agency business. 12. In yet another judgment, the Calcutta High Court in the case of Commissioner of Income Tax Vs. Rajeeva Lochan Kanoria, (1994) 208 ITR 616 Cal explaining the meaning of the words 'business expenditure', held as under- 5...The only enquiry that is to be made is whether the payment of interest was in respect of capital borrowed for the purpose of the assessee's business or profession. There is no dispute that the capital was borrowed in the instant case and interest was paid on the borrowed capital. It is to be established that the amount was borrowed for the purpose of business or profession. The amount borrowed may be utilised for the purpose of acquisition to stock-in-trade or for the purpose of acquisition of capital assets. But so long as the money is utilised for business purposes the interest will have to be allowed as deduction. It is well-settled that business expenditure is not confined to expenses incurred on revenue account. Capital expenditure may not be allowed as a deduction under Section 37 because the section specifically bars any deduction of expenditure of capital nature. But, Section 36 is differently worded. There is no bar in Section 36(1)(iii) to allowance of interest paid in respect of capital borrowed which has been utilised for purchase of a capital asset. 13. It is in the background of these judgments we have to see Section 36(1)(iii) of the Act. 36. But, Section 36 is differently worded. There is no bar in Section 36(1)(iii) to allowance of interest paid in respect of capital borrowed which has been utilised for purchase of a capital asset. 13. It is in the background of these judgments we have to see Section 36(1)(iii) of the Act. 36. Other deductions.-(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in Section 28- (i) & (ii) ** ** ** (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession: Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction. Explanation-Recurring the subscriptions paid periodically by shareholders, or subscribers in Mutual Benefit Societies which fulfill such conditions as may be prescribed, shall be deemed to be capital borrowed within the meaning of this clause; The provision was added by Finance Act, 2003 which came into force with effect from 1-4-2004. 14. A reading of the aforesaid provision makes it clear the amount of interest paid in respect of capital borrowed for the purpose of business or profession is allowable as deduction in computing the income under Section 28. In other words, the assessee has to invest the money so borrowed in business or profession. There is no indication in the said provision that the amount is to be invested in the business which he is carrying on, on the date of borrowing. The amount is to be invested in his business, business which he is carrying on or a business which he intends commencing. But, the test is, it should be a business. Therefore, the contention of the revenue that unless the amount borrowed is invested in the existing business, he is not entitled to deduction under Section 36(1)(iii) is not tenable. May be in a case where such borrowing is invested in acquiring shares, the intention of acquiring shares is to be ascertained. But, the test is, it should be a business. Therefore, the contention of the revenue that unless the amount borrowed is invested in the existing business, he is not entitled to deduction under Section 36(1)(iii) is not tenable. May be in a case where such borrowing is invested in acquiring shares, the intention of acquiring shares is to be ascertained. If the intention is to get only dividend it cannot be construed as an investment in business or profession. On the other hand if the investment in shares is made with the intention of carrying on business and the receipt of dividend is only incidental or ancillary, then Section 36(1)(iii) is attracted. 15. In the instant case the assessee is carrying on the business of rendering technical assistance. The amount which is borrowed is not used in rendering technical service. It is invested in acquiring 25.1 % of shares in M/s Spicer India Limited, the intention of investment of the shares is to carry on business and not to be content with by receiving dividend. This argument has been rejected by the assessing authority on the ground that acquiring shares to the extent of 25.196 would not give him a control over the company. In law to carry on business one need not have majority shares. With a proper understanding with the persons who have invested the money he could carry on the business. In the instant case, probably to carry on the business of the said company technical service is required which is provided by the assessee. In addition to that to have control over the company they have also invested money in acquiring shares to the extent of 25.196. Therefore, the material on record clearly establishes the intention on the part of the assessee to carry on the business after acquiring shares and therefore as the said business to be carried is the business of the assessee and the amount is borrowed for the purpose of the said business, the amount of interest paid in respect of the capital borrowed is eligible for deduction under Section 36(1)(iii) of the Act, as rightly held by the Tribunal. In that view of the matter, we do not see any merit in these appeals. The substantial question of law framed in these appeals is answered in favour of the assessee and against the revenue. Appeals are dismissed. No costs.