K. Jagannatha Shetty, Actg. C.J.—This is a reference under section 256(1) of the Income Tax Act, 1961. The Tribunal has referred the following question :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the Commissioner of Income Tax (Appeals) decision who held that only interest of Rs. 2,181 has to be disallowed as against Rs. 6,954 added by the Income Tax Officer ?"

2. Shri Sohanraj Jain is one of the partners of the assesses-firm. He had two accounts, one capital account and the other house property account. Both the accounts are in the books of the assesses-firm. In the capital account, on the money lent to the firm, interest of Rs. 6,954 was credited. In the house property account, on the money borrowed by him from the firm, interest of Rs. 9,135 was debited. The assessee claimed before the Income Tax Officer that it should be the net interest that has to be taken into consideration for the purpose of assessment. Thus, he calculated the difference of Rs. 2,181 which, according to him, alone could be included in the total income. The Income Tax Officer, however, did not accept the claim. He held that the e