Judgment :- THANIKKACHALAM J. At the instance of the Department, the Tribunal referred the following question for the opinion of this court under section 256(2) of the Income-tax Act, 1961 "Whether, on the facts and in the circumstances of the case and on proper interpretation of the provisions of section 40(b) of the Income-tax Act, 1961, the Appellate Tribunal was right in holding that the interest paid to the partners by the firm should be deducted from the interest received by it from the partners on their overdrawings and the net interest payment by the firm, if any, alone should be disallowed under the said section ?" * The assessee is a partnership concern carrying on business in money-lending. For the assessment year 1979-80, it filed a return of income admitting a total income of Rs. 16, 511. While completing the assessment, the Income-tax Officer noticed that interest payments made by the firm to its partners to the tune of Rs. 23, 240 were not added back by the assessee in terms of section 40(b) of the Income-tax Act, 1961. It was argued on behalf of the assessee that the partners owed a sum of Rs. 84, 970 to the firm by way of interest and if the net result of the payments and the receipts are considered, there was only a receipt by the firm from the partners and that, therefore, there was no scope for the application of the provisions of section 40(b) of the Act. However, the Income-tax Officer rejected the assessee's contention and added back a sum of Rs. 23, 240 under section 40(b) of the Act. On appeal, the Appellate Assistant Commissioner followed the earlier order of the Tribunal in the case of the same assessee for the assessment year 1976-77 and held that in view of the fact that there was only an excess of interest from the partners, the provisions of section 40(b) could not be pressed into service. Accordingly, the Appellate Assistant Commissioner deleted the addition of Rs. 23, 240. On further appeal, the Appellate Tribunal confirmed the order passed by the Appellate Assistant CommissionerThe order passed by the Tribunal is in accordance with the decision of the Supreme Court in the case of Keshavji Ravji and Co. v. CIT. Accordingly, we answer the question referred to us in the affirmative and against the Department. 23, 240. On further appeal, the Appellate Tribunal confirmed the order passed by the Appellate Assistant CommissionerThe order passed by the Tribunal is in accordance with the decision of the Supreme Court in the case of Keshavji Ravji and Co. v. CIT. Accordingly, we answer the question referred to us in the affirmative and against the Department. There will be no order as to costs.