SYED SHAH MOHAMMED QUADRI, J.

( 1 ) THE Income-tax Appellate Tribunal, Hyderabad, referred the following question of law to the High Court for its opinion under section 256 (1) of the Income-tax Act :"1. Whether, on the facts and in the circumstances of the case, the assessee could be held to have commenced its business and, therefore, or otherwise, is entitled to the deduction of the administrative expenses and exploration and mining expenses from out of its interest income ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Income-tax Officer to consider, to the extent admissible, the claim of the assessee for setting off of interest received on short-term deposits against unadjusted expenditure for the assessment years 1976-77, 1977-78, 1978-79 and 1979-80 ?"

( 2 ) UNDER the United Nations development programme, the assessee-company was incorporated for establishment of a sponge iron plant. It is a Government company and is a subsidiary of the Andhra Pradesh Industrial Development corporation (APIDC), another State undertaking. The share capital is contributed by the State Government as well as the Central Government. Out o

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