K. Shivshankar Bhat, J.—The question referred to us, as called for by this court, under section 256(2) of the Income Tax Act, 1961, reads thus :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is right in law in holding that since no additions have been made in earlier years, the opening debit balance cannot be considered during the current year and that the enquiry has to be limited to the increase in the current year only ?"

2. The relevant accounting year of the assesses-firm ended on March 31, 1978. During this accounting year, the assessee had advanced certain sums to Nalanda Enterprises, Bangalore ("Nalanda", for short); the balance outstanding from Nalanda was Rs. 2,55,750 as on March 31, 1978; no interest was charged against this advance. The assessee had borrowed from third parties and had been paying interest thereon; this interest was claimed as a deduction out of the assessee's income. Some of the partners of the assessee and Nalanda were common and they had business links interest; in these circumstances, the assessing authority disallowed the deduction claimed by the assessee to the extent of interest-free advance