1. In this reference, the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as " the Tribunal"), has referred the following questions for the opinion of this court:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in allowing a sum of Rs. 34,072 being the amount of interest paid by the assessee on moneys borrowed for the purpose of constructing a new cinema building called Mayank which was not brought into use in the accounting year under reference ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 2,740 being the amount of travelling expenses incurred for procuring loan for construction of Mayank cinema is allowable as a deduction ? "

2. This reference relates to the assessment year 1976-77.

3. M/s. Shah Theatres Private Limited (hereinafter referred to as "the assessee ") is a private limited company incorporated in 1962. It carries on the business of exhibition of motion pictures. During the relevant previous year, the assessee started construction of a cinema building known as" Mayank "cinema at Jaipur and for that purpose