Sen, J. - (1.) This reference arises out of the income-tax assessment of New Central Jute Mills Co. Ltd., the assessee, in the assessment year 1958-59, the relevant previous year being the one ended on the 31st March, 1958. On an application of the Commissioner of Income-tax (Central), Calcutta, under Section 66(1) of the Indian I.T. Act, 1922, the Tribunal has referred for the opinion of this court the following questions as questions of law arising out of its order : "1. Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,46,875 spent on the purchase of loom hours was an allowable revenue expenditure under the Indian Income-tax Act, 1922 ?
(2.) Whether, on the facts and in the circumstances of the case, the sum of Rs. 7,79,117 (sic) paid to the U.P. Government as interest on moneys borrowed from it was allowable as a deduction against the interest income of Rs. 1,75,471 earned from the Central Bank of India Ltd. ? " 2. The first question appears to be covered by a decision of this court in CIT v. Empire Jute Company Ltd. Following the same, we answer the said question in the negative and in favour of the revenue.
(3.) The facts relating to the other question as has been found and/or admitted in the proceedings are shortly as follows : The assessee, at the material time, was setting up a heavy chemical plant at Varanasi and in the relevant assessment year the said plant was under erection. Earlier, in or about 1955, the assessee had successfully negotiated with the Government of Uttar Pradesh and had obtained a loan of Rs. 1.45 crores for the purpose of setting up the said plant. Amounts received under the said loan had been kept in deposit with the Central Bank of India pursuant to the terms thereof till transfer or utilization thereof for the stipulated purpose.;