Reference bench cannot decide beyond the referred question; extra issue ruling was set aside and remanded.

A Special Bench of the ITAT constituted under section 255(3) cannot decide issues beyond the precise question referred to it. Here, the Division Bench referred only the deduction claim of Rs. 3,50,644, but the Special Bench also ruled on a separate claim of Rs. 13,58,390 that was not covered by the reference. The High Court held that the Special Bench had travelled beyond the scope of the reference, making its order unsustainable in law. The writ petition succeeded, the Tribunal's order was set aside, and the matter was remitted to the Division Bench for fresh disposal after notice to both sides.

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Issues: Whether the Special Bench of the Income-tax Appellate Tribunal could travel beyond the question referred to it under section 255(3) and decide an additional deduction issue not covered by the reference.

Analysis: The Division Bench referred only the question concerning deduction of Rs. 3,50,644 for decision by the Special Bench. The Special Bench nevertheless dealt with that item as well as a separate claim concerning Rs. 13,58,390. A reference under section 255(3) confines the Special Bench to the issue actually referred, and it cannot enlarge the scope of the reference or adjudicate matters not placed before it.

Conclusion: The Special Bench acted beyond the reference and its order was unsustainable in law.

Final Conclusion: The writ petition succeeded, the Tribunal's order was set aside, and the matter was remitted to the Division Bench of the Income-tax Appellate Tribunal for fresh disposal after notice to both sides.

Ratio Decidendi: A statutory reference bench cannot decide issues outside the precise question referred to it, and any order travelling beyond the reference is liable to be set aside.

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