The taxpayer sought to deduct interest charged on borrowed money that was used to repay a previous loan that had financed the purchase of shares. Since the shares were sold at the same time as the original loan was replaced, there was no source of income for which the interest on the replacement loan was incurred, and the deduction of that interest accordingly was denied. "[A]n essential for interest deductions [under s. 20(1)(c)] is the continued existence of the source to which the interest expense relates."
Even if the alleged indirect use could be considered, the income on the preserved assets was less than 10% of the interest on the borrowed funds.