Reference jurisdiction cannot expand to new questions; procedural deferral and HRA disallowance raised no referable issue.

A question not raised before the Tribunal could not be introduced for the first time in a later reference petition, because the reference jurisdiction was confined to the question earlier sought to be referred. The Tribunal's decision to defer the closing stock valuation issue pending a Special Bench ruling was treated as a permissible procedural course and did not itself create a referable question of law. On the HRA issue, the court followed its contemporaneous view and declined reference. The petition for reference was therefore not entertained on either issue and was dismissed.

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Issues: (i) Whether a question not raised before the Tribunal under section 256(1) of the Income-tax Act, 1961 could be introduced for the first time in a petition under section 256(2); (ii) whether the Tribunal's deferral of the closing stock valuation issue till the decision of a Special Bench gave rise to a referable question of law; (iii) whether the exclusion of HRA for computing disallowance under sections 40A(5) and 40(c) warranted reference.

Issue (i): Whether a question not raised before the Tribunal under section 256(1) of the Income-tax Act, 1961 could be introduced for the first time in a petition under section 256(2).

Analysis: The petition sought reference of a question different from the one originally proposed before the Tribunal. A reference under section 256(2) is confined to the question that was asked to be referred under section 256(1), and a new question cannot be permitted to be introduced at the later stage.

Conclusion: The new question could not be raised under section 256(2), and the request for reference on that basis was not maintainable.

Issue (ii): Whether the Tribunal's deferral of the closing stock valuation issue till the decision of a Special Bench gave rise to a referable question of law.

Analysis: The Tribunal was not shown to have violated any legal bar by postponing the issue pending the Special Bench decision. The deferral was treated as a procedural course within the Tribunal's authority and did not disclose any question of law.

Conclusion: No referable question of law arose from the Tribunal's deferral of the closing stock valuation issue.

Issue (iii): Whether the exclusion of HRA for computing disallowance under sections 40A(5) and 40(c) warranted reference.

Analysis: The court followed its contemporaneous view in a similar matter and found no basis to require a reference on the same question.

Conclusion: Reference on the HRA issue was declined.

Final Conclusion: The petition for reference under section 256(2) was not entertained on either question and stood dismissed.

Ratio Decidendi: A question not raised before the Tribunal under section 256(1) cannot be introduced for the first time in a petition under section 256(2), and a procedural deferral by the Tribunal to await a Special Bench decision does not, by itself, give rise to a referable question of law.

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