Per Dr. V. Balasubramanian, Vice President - The first two appeals were fixed as the Special Bench hearings having been referred to the Special Bench by the President. The other appeals involving the same point have come up as interveners. The point at issue is considered on the facts of the first assessee.

2. The assessee-company paid interest of Rs. 68,290 to directors and their relatives. In the computation of income while filing the return, the assessee disallowed interest of 15 per cent on the net amount of Rs. 61,101. The disallowance amounted to Rs. 9,165. At the time of the assessment, however, the assessee's learned counsel contended before the ITO that the provisions of section 40A(8) of the Income-tax Act, 1961 ('the Act'), on the basis of which the above disallowance was made, were not applicable to the assessee's case. The assessee had not invited public deposit, not even deposits from the directors. All the accounts were current accounts to which, according to the learned counsel, the provisions of section 40A(8) were not applicable. Some decisions of the Tribunal were also cited before the ITO. Rejecting the contention of the assessee and holding that it was not