( 1 ) THIS is a reference under Section 66 (1), Income-tax Act, made at the instance of the assessee. The assessee is a registered firm which carries on business, owns house property, has income from dividends and other sources. During the relevant assessment year, the assessee claimed certain deductions as hotel charges incurred by the partners while on tour connected with business. The partners of the assessee firm had also lent money to the firm for purposes of carrying on its business and had from time to time borrowed money from it. There was a Khata in the name of each partner which showed the amount of interest paid by the firm to the partner on the amount borrowed from him and also interest received from the partner on any amount borrowed by him. The total amount paid to the partners as interest OD amounts borrowed from them was Rs. 19,712/-, while the amount received from the partners as interest on monies borrowed by them was Rs. 7,931/ -. The assessee had in his return deducted from its income the sum of Rs. 19,712/- paid as interest to the partners. The Income-tax Officer disallowed the hotel charges paid by the partners, as also the whole item of Rs. 19,712/-which he added back to the income. The Appellate Assistant Commissioner and the appellate Tribunal directed a sum of Rs. 13,412/- only to be added back to the return.

( 2 ) ON the application of the assessee, the following two questions have been referred to us for our decision:

"1. Whether the hotel charges of the proprietors in respect of a tour undertaken for the purposes of procuring business for the firm are allowable expenditure under Section 10 (2) (xv) of the income-tax Act? 2. Whether the excess interest received from the partners of the firm on the amounts overdrawn by them after adjustment against the payments of interest made to them by the firm is taxable income in the hands of the firm?"

( 3 ) AS regards the first question it is already covered by our decision in -- ramkishan Sunderlal v. Commr. of Income-tax, U P. , (1951) 19 ITR 324 at p. 330 (All) (A ). We see no reason to reconsider our view and answer the question in the negative.

( 4 ) AS regards the second question, the assessee was a partnership firm of which the five partners were, (1) Jagannath Mahadeo Prasad (2) Kamta Prasad (3) Har Prasad (4) Chunnilal Sohanlal and (5) Gangadin Kedar-nath. It appears that the first four partners had invested money in the partnership firm on which the firm was paying interest to them. The amount of interest paid by the firm to Jagannath Mahdeo Prasad being Rs. 12,166/-, to Kamta Prasad Rs. 601/-, to Har prasad Rs. 3,423/- and to Chunnilal Sohanlal Rs. 3,522/-, the total amount thus paid as interest to the partners on the capital borrowed from or invested by them came to Rs. 19,712/ -. It appears from the accounts that the partners withdrew or borrowed money from the firm on which they were charged interest by the firm. The amount of interest thus paid by Jagannath Mahadeo prasad was Rs. 5. 699/-Kamta Prasad Rs. 1,439/- and Gangadin Kedarnath Rs. 793/ -. The total amount of interest received by the firm from the partners for money borrowed by them from the firm was Rs. 7,931/ -.

( 5 ) THE Income-tax Officer added back the whole amount of Rs. 19,712/- paid by the firm to the partners for money borrowed from them without deducting the sum of Rs. 7,931/-, the interest received by the firm from the partners, The assessee filed an appeal and the Appellate Assistant commissioner amended the order by deducting the amounts of Rs. 5,699/- and Rs. 601. /- only, thus holding that a sum of only Rs. 13412/- (Rs. 19,712/- minus Rs. 6300/-) should have been added back to the return made by the firm. The Tribunal upheld the Appellate Assistant commissioners order.

( 6 ) THE Appellate Assistant Commissioner and the Tribunal dealt with the amount received from and paid to each partner separately. For example, Jagannath Mahadeo Prasad had received Rs. 12,166/-