(1) Any payment of interest or, as the case may be, payment of any share of profit, on any capital borrowed for the purpose of business shall be allowable as business expenditure.

(2) If it is found that any part of the money borrowed has been used for purposes other than the business or any part of the assets acquired by the money borrowed has been transferred elsewhere outside the business wherein investment is not the business of the transferor, in such cases, the interest or share of profit expense shall be allowed at the proportional rate of the portion of the said money or asset used in the business.