Ashok Bhan, J.

1. At the instance of the Revenue, the Income-tax Appellate Tribunal, Amritsar (hereinafter referred to as "the Tribunal"), has referred the following question of law to this court for its opinion :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the assessee is entitled to the deduction of interest of Rs. 13,358 under Section 24(1)(vi) of the Income-tax Act, 1961 ?"

2. The dispute pertains to the assessment year 1978-79. The assessee, a private limited company, was a partner in the firm, Four Fields Poultry Products, Amritsar. The partnership stood dissolved with effect from July 1, 1975, by a dissolution deed of the same date. The assessee-company took over the entire business of Four Fields Poultry Products along with all its assets and liabilities. The value of the assets acquired was Rs. 3,09,521. As on July 1, 1975, the account of the assessee in the books of the Four Fields Poultry Products showed a credit balance of Rs. 1,24,785.02. There were four other partners, namely, Jagdish Chander Mehra, Jugal Kishore Mehra, Jai Gopal Mehra and Joginder Lal Mehra. Each of them had credit balanc