K.C. AGRAWAL, J.

1. This is a reference at the instance of Revenue and relates to the assessment years 1971-72 and 1972-73. R. N. Mehra was one of the partners of the respondent-assessee, Messrs Nitro Phosphetic Fertilizer, Lucknow. He joined the partnership representing the Hindu undivided family of which he was the karta.

2. In the books of account of the firm, there was a capital account for the Hindu undivided family and a deposit in the name of R. N. Mehra, individual. On the deposit in this account, the firm paid interest to the individual and the same was claimed as a deduction in the profit and loss account. The amounts of interest paid were as under :

Assessment year Amount of interest

1971-72 Rs. 8,400

1972-73 Rs. 9,120

The assessees contention was that since the status of R. N. Mehra, depositor, was different from the status of R. N. Mehra (HUF), partner, it was entitled to deduct the interest paid to R. N. Mehra in his individual capacity. The Income-tax Officer did not agree with the assessee. He held that since R. N. Mehra was a partner in his capacity as karta of the Hindu undivided family such payment of interest was not allowable according to the provi