1. - The Income-tax Appellate Tribunal has referred the following question of law for the decision of this court, under section 256(1) of the Income-tax Act (hereafter to be called as " the Act') :

"Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the interest paid to the directors on their deposits in running accounts was not disallowable to the extent prescribed under section 40A(B) of the Act? "

2. The brief facts of the case are that the Income-tax officer, while finalising the assessment for the assessment year 1980-84, disallowed sum of 15 per cent. interest paid under section 40A(8) of the Act. This interest was paid to the directors on their current accounts maintained with the company. The Commissioner of Income-tax (Appeals) deleted the said disallowance and, affirming the decision of the Commissioner of Income-tax (Appeals), it was held by the Tribunal that, under section 40A(8) of the Act, where the assessee, being a company (other than banking company or a financial company), incurs any expenditure by way of interest in respect of any deposit received by it, fifteen per cent. of such expenditure shall