( 1 ) THE assessee is a Banking Company. The assessee filed return for the year 1976 77 admitting the chargeable interest of Rs. 10,17,25,410/ -. The assessee claimed that re-discount charges paid of rs. 36. 40. 206/- and interest earned on overdue bills of Rs. 84,77. 124/- should not be taxed. The I. T. O. rejected both these claims and brought the two sums to tax. On appeal the A. A. C. confirmed the said order. On further appeal, the Tribunal held that in respect of the rediscount, the assessee was entitled to a deduction, but on the other question agreed with the A. A C. that the interest is charged for the user of the funds beyond the stipulated time and the transaction results in earning of interest within the meaning of Sec. 2 (7) of the Interest tax Act and upheld assessment on this item.

( 2 ) THREE questions have been referred by the Tribunal for our opinion and they are :1. Whether on the facts and circumstances of the case, the overdue interest on the Demand Bills is interest within the meaning of Sec. 2 (7) of the Interest tax Act ? 2. Whether on the facts and in the circumstances of the case, the ITAT was right in holding that the contention of the a