Dipak Kumar Sen, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, the only question referred to us is as follows : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the disallowance of Rs. 3,32,158, Rs. 3,79,290 and Rs. 3,64,760 representing interest on bank overdraft and debenture loan as allocated to the Pakistan branch by the assessee-company in the assessments for the assessment years 1960-61, 1961-62 and 1962-63, respectively ?".
(2.) The assessment years involved as will appear from the question itself are 1960-61, 1961-62 and 1962-63, the relevant previous years each ending on the 30th June. The assessee, Carew & Co.'Ltd., is an Indian company and has its registered office in Calcutta. The assessee carries on the business of manufacturing and selling spirits, liquors, sugar, etc. The assessee has distillery and factories at Rosa and Asansol in the Union of India and also at Darsana, formerly in East Pakistan, now Bangladesh. The control and management over all the branches are exercised from the head office of the assessee in Calcutta. All the directors of the assessee reside in Calcutta and the factories are run by managers who periodically send their reports to the directors in Calcutta and take instructions from them. The entire financial arrangements of the assessee are made at the head office at Calcutta where the accounts of the company as a whole are consolidated, though statements of accounts relating to different branches are prepared separately.
(3.) Before the partition of India the assessee had raised two mortgage debentures, the first being in the year 1938 and the second in 1941. The funds raised by the said debenture in 1938 were utilised for building the factory at Darsana. After the partition of India the said factory at Darsana fell within the territory of East Pakistan.;