Interest on unsecured loan to unrelated party

This discussion explores whether a partnership firm can deduct interest paid at a high rate (42% p.a.) on an unsecured loan from an unrelated party as a business expense. The initial suggestion referenced Section 40(b)(iv) of the Income Tax Act, but this section pertains to interest paid to partners, not third parties. The core question remains about the deductibility of such high-interest payments to external lenders.