1. - The Income-tax Appellate Tribunal has referred the following question of law arising out of its order in respect of the years 1970-71 to 1972-73 :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the interest on the amount advanced to Messrs. Citric India Ltd., Bombay, as per the agreement letter dated July 27, 1965, had accrued to the assessee-company following the mercantile system of accounting ? "

2. The brief facts of the case are that the assessee-company agreed to advance a sum of Rs. 20 lakhs to Messrs. Citric India Ltd. and an agreement in this regard was executed on July 27, 1965. The amounts were to be advanced in instalments of Rs. 10 lakhs from February, 1966, and the loan was to carry interest at 12 per cent. per annum. The assessee-company advanced loans amounting to Rs. 15.37 lakhs as on June 30, 1969, Rs. 15.39 lakhs as on June 30, 1970, and Rs. 17.39 lakhs as on June 30, 1971. The interest amount on these loans amounting to Rs. 1,81,000 for the assessment year 1970-71, Rs. 2,08,864 for the assessment year 1971- 72, and Rs. 2,28,156 for the assessment year 1973-74, were not shown by the asse