( 1 ) THE following question of law has been referred by the Income-tax Appellate Tribunal (Delhi Bench "b"), under provisions of section 66 (1) of the Indian Income Tax Act, 1922 (hereinafter referred to as "the Income Tax Act") :-

"whether on the facts and in the circumstances of the case, the interest credited to the accounts of the four donees was a permissible deduction ?"

( 2 ) MESSRS New India Colour Co. , Delhi, a partnership firm registered under section 26a of the Income Tax Act, is the assessee in the case. The assessment years under reference are 1957-58 and 1958- 59; the relevant previous years being the years ending on the 31st January 1957 and the 31st January 1958 respectively.

( 3 ) THE assessee-firm had two partners, Kartar Singh and one of his sons named Kahan Chand. The share of Kartar Singh was twelve annas in a rupee while that of Kahan Chand was four annas in a rupee.

( 4 ) BY a letter dated the 31st January 1956 Kartar Singh requested the assessee firm to debit his account by Rs. 69,000. 00 and to credit the accounts of his sons and daughter as under:-

( 5 ) ACCORDING to the above-mentioned letter of Kartar Singh he had gifted the amounts which