Interior Breweries Ltd. v. MNR, 55 DTC 1090, [1955] CTC 143 (Ex Ct) -- summary under Paragraph 20(1)(c)

The taxpayer used money which it had borrowed under temporary bridge financing from a bank to acquire the shares of other brewing holding-companies, and shortly thereafter used the proceeds of loans from subsidiaries of the acquired companies, and of the issuance of bonds and debentures of the taxpayer, to retire the bank indebtedness. The interest on the replacement loans was not deductible because they were used to pay off a loan which had been used to acquire shares producing exempt income. The fact that the acquisition of the holding companies enabled the taxpayer to enter into remunerative management contracts with their subsidiaries was not sufficient to establish interest deductibility.