HUF property blending and interest allowability were treated as factual matters, leaving no referable question of law.

Blending of separate property into Hindu undivided family property can be recognised without any prescribed statutory mode, and the existence of the HUF is not denied merely because the prior holder died. On the facts recorded, the Tribunal's view that the capital account formed family property was sustained because no contrary dispute was shown. The allowability of interest under the Income-tax Act, 1961, including issues under sections 36(1)(iii) and 37, depended on factual appreciation rather than a referable question of law. The rate of interest was also treated as a factual matter, so no question of law arose in reference jurisdiction.

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Issues: (i) Whether the existence of a Hindu undivided family could be denied merely because of the death of the previous holder, in the context of blending of individual property into joint family property; (ii) whether, on the facts found, the allowability of interest under the Income-tax Act, 1961 raised any referable question of law; (iii) whether the rate of interest involved any question of law.

Issue (i): Whether the existence of a Hindu undivided family could be denied merely because of the death of the previous holder, in the context of blending of individual property into joint family property.

Analysis: The capital account standing in the name of the Hindu undivided family was treated as family property with effect from the relevant date. An individual can impress separate property with the character of Hindu undivided family property by blending, and no specific statutory mode of blending is prescribed. The absence of a contrary dispute before the Tribunal on this aspect supported the conclusion that the Hindu undivided family existed.

Conclusion: The contention that no Hindu undivided family existed was rejected.

Issue (ii): Whether, on the facts found, the allowability of interest under the Income-tax Act, 1961 raised any referable question of law.

Analysis: The Tribunal had relied on factual aspects to hold that interest could be demanded and paid even without a specific agreement. The challenge under section 36(1)(iii) and section 37 of the Income-tax Act, 1961 depended on the appreciation of facts rather than on a legal principle requiring determination in reference jurisdiction.

Conclusion: No referable question of law arose on the allowability of interest.

Issue (iii): Whether the rate of interest involved any question of law.

Analysis: The appropriate rate of interest was held to be essentially a factual matter.

Conclusion: No question of law arose on the rate of interest.

Final Conclusion: The reference applications were disposed of without answering the referred questions, as the disputes were either factual in nature or did not give rise to any question of law.

Ratio Decidendi: In reference proceedings, factual findings on blended family property, the allowability of interest, and the appropriate rate of interest do not raise a question of law unless a legal issue is independently established on the record.

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