Rama Jois, J.—As directed by this court, by an order made under s. 256(2) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the Income Tax Appellate Tribunal, Bangalore Bench, has referred the following question of law for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in disallowing the interest of Rs. 42,846 claimed by the assessee for the assessment year 1969-70 ?"

2. During the accounting year 1967-68, the assessee was carrying on the business of film distribution on his own and also exhibition of films on percentage basis under agreements entered into by him with theatre owners. For the purpose of securing a lease of a fully equipped cinema theatre, he entered into an agreement dated July 5, 1967, with his wife. According to the agreement, the assessee was to pay to his wife a sum of Rs. 3,50,000 and the wife was to construct the cinema theatre, to equip it fully, for being used for the exhibition of films and to allow the assessee to use the theatre on rental basis and the rent payable was required to be adjusted out of the deposit so made in the manner indicated in the agreement.