R.K.Agrawal, J. - (1.) The Tribunal, Allahabad, has referred the following questions of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act') for opinion to this Court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the amount of Rs. 69,973 realised by the assessee as excess storage rent could not be treated as income of the assessee-company and brought to tax in the asst. yr. 1981-82 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the disallowance under Section 40A(8) should be restricted to the net payment of interest ?"
(2.) The reference relates to the asst. yr, 1981-82.
(3.) Briefly stated, the facts of the case so far as they are relevant for the purposes of questions referred to us are as follows : During the assessment year in question the respondent which is a private limited company and is running a cold storage, has paid interest amounting to Rs. 57,309 to various persons. Before the assessing authority it was claimed that only the net amount of interest should be taken into consideration for working out 15 per cent of the' disallowance as provided under Section 40A(8) of the Act. The plea was not accepted by the assessing authority. Feeling aggrieved, the respondent preferred an appeal before the CIT(A) who upheld the order of the assessing authority. Still feeling aggrieved, the respondent preferred a second appeal before the Tribunal. The Tribunal had allowed the claim of the respondent-assessee by following its decision in another case, namely, Laxmi Talkies (P) Ltd. v. ITO (ITA No. 1498/All/1984, dt. 18th May, 1985), wherein it was held by the Tribunal that disallowance under Section 40A(8) of the Act should be restricted to net payment of interest.;