JUDGMENT U.L. Bhat, C.J. 1. The following question of law has been referred to this court under Section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, Jabalpur Bench, at the instance of the assessee ; " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in applying Section 40(b) to the interest paid to the kartas of the three Hindu undivided families when they were partners in the firm in their individual capacity ?" 2. The dispute relates to the income of a partnership-firm for the assessment year 1976-77. Datu Mal had three sons, Nachanmal, Nichaldas and Sangatmal. The father, in his capacity as karta of the Hindu undivided family and the three sons in their individual capacities, along with two others, were partners of the firm. The father died on June 17, 1975, in the year relevant to the assessment year 1976-77. It appears thereafter the firm was reconstituted with the three sons in their individual capacities as partners along with strangers. A sum of Rs. 2,148 was paid to the three sons towards interest in the assessment year concerned. This represented interest on the capital of the father in the firm. 3. The Income-tax Officer held that the father's capital was inherited by the three sons in their individual capacities. He rejected the alleged partition set up by the three sons and held that the payment of interest was made to the three sons in their individual capacity and, therefore, the amount of interest is not liable to be deducted from the income of the firm under Section 40(b) of the Act. 4. The appellate authority held that Datu Mal was a partner in his representative capacity as karta of the Hindu undivided family and the partition set up was true. Accordingly, it was held that the interest paid cannot be added back under Section 40(b) of the Act. The Appellate Tribunal, in appeal filed by the Department, upheld the order of the Income-tax Officer on the ground that interest paid to the partners in whatever capacity has to be disallowed. 5. The law in this regard has been declared by a Full Bench of this court in CIT v. Narbharam Popatbhai and Sons [1987] 166 ITR 534. The Appellate Tribunal, in appeal filed by the Department, upheld the order of the Income-tax Officer on the ground that interest paid to the partners in whatever capacity has to be disallowed. 5. The law in this regard has been declared by a Full Bench of this court in CIT v. Narbharam Popatbhai and Sons [1987] 166 ITR 534. In that case, the firm had two accounts: one in the name of the Hindu undivided family and the other in the individual account of another partner who deposited certain amounts of the firm. The firm paid to the individual partner interest on his personal deposit. It was held that the interest was not liable to be added to the income. 6. Our attention is invited to the Explanations to Section 40(b) of the Act with effect from April 1, 1985. The Full Bench, considering the Explanations held them to be clarificatory of the law and not mandatory of the law. We are bound by the above decision which with great respect appears to be correct also. 7. In the result, we answer the question in the negative, i.e., in favour of the assessee and against the Revenue. 8. A copy of this order under the signature of the Registrar and the seal of the High Court shall be transmitted to the Appellate Tribunal. There shall be no order as to costs.