Sec. 36 of Income Tax Act, 1961 – Interest on borrowed capital – The appellant is a registered firm engaged in the business of manufacture of resins and chemicals with the help of credit purchases bearing interest and largely selling its finished products to its sister concern for the assessment year 1997-98, the appellant filed the return of income on 25.09.1997 declaring an income of Rs. 4,47,710/-. The AO, made an order of assessment disallowing the interest expenditure claimed by the appellant on the ground that the appellant had deliberately adopted artificial and colourable device for reducing the income and tax thereon through arrangement of letter of credit discounting in respect of sale bills raised in the name of the sister concern. The appellant preferred an appeal before the CIT (A) which was dismissed. ITAT upheld the order passed by the CIT (A). High Court dismissed the appeal of the assessee holding that:– The findings of fact have been recorded by the AO, the CIT (A) as well as the ITAT. The Tribunal has assigned cogent reasons for not treating the borrowings as business expenditure incurred during the course of business which is evident from the order passed by the Tribunal – YENEPOYA RESINS & CHEMICALS [2020] 423 ITR 161 (KARN)