Interest deduction

Money borrowed for payment of dividend!

I suppose that you are not asking it in context of a company, because that is not allowed to them.

And for other entities: it's not related to business, hence not allowed.

Thank you Manish for your reply, however, there is a possibility that the company has earned profits but only due to non-availability of cash they resort to borrowing and it is used for business purposes the same should be allowed as business expense, there is also a Supreme Court ruling on this wherein it was allowed as business expense. Please clarify.

Yes, that could be.

Sorry I have no clue about supreme court ruling; I couldn't find it online too.

Income tax act says that the loan should be for business purpose. I found this: https://www.livemint.com/Money/TQa9YzKIH9BojEimOQFF9L/Top-Indian-firms-take-on-more-debt-to-pay-dividends.H T M L, that many companies do it. It is quite common, so may be this constitute business purpose; following constant dividend policy.

As per my understanding the interest should be allowed. If you remember the ruling details, then please share.

Thanks