( 1 ) THIS is a reference under Section 21, Excess Profits Tax Act, read with Section 66 (1), Income-tax Act, of a short question of law under Section 10 (2) (xi) of the latter Act. The reference has been made by the Calcutta Bench of the Income-tax Appellate Tribunal. In order to appreciate the true import of the question referred, it is necessary to state first the facts out of which it has arisen.

( 2 ) THE assessee, Messrs. Begg Dunlop and Co. , Ltd. , are, or rather were the managing agents of two other companies, namely, Craig Jute Mills Limited and Waverly Jute Mills Limited. It appears that as such managing agents they had made advances to each of the managed companies having lent a sum of Rs. 10,00,000/- to the Waverly Jute Mills Limited and a little less than Rs. 10,00,000/-to the Craig Jute Mills Limited. The companies apparently did not flourish and as early as the assessment year 1934-35, the assessee company began a practice which has formed the subject of much debate at our Bar. The practice was that interest amounts due on the loans advanced to the two managed companies were credited to an account called the Interest Reserve Account and they we