- (1.) WE have heard Sri S.N. Morarka, learned counsel appearing on behalf of the applicant, and Sri Prakash Krishna assisted by Sri Bharat Ji Agrawal, learned counsel for the opposite party.
(2.) WE are of the view that a question of law arises in the facts of the case in view of difference of opinion in judicial pronouncements. We, 'however, reframe the question as follows : "Whether, on the facts and in the circumstances of the case, disallowance of the interest paid by the assessee on its borrowed funds in excess of 12 per cent, was justified under S. 36(1) of the IT Act, 1961, only because the assessee company had utilised its own fund to advance loans at a lower rate of interest to sister concern ?" We, accordingly, direct the Tribunal to draw up a statement of the case and refer the aforesaid question to this Court for its opinion, as early as possible. The application stands allowed to the extent indicated above.;