Reference on disallowance of advertisement expenses directed where the Tribunal's refusal was found unjustified.

Disallowance of advertisement expenses was treated as raising questions fit for the High Court's opinion, because the Tribunal's refusal to make a reference was not justified on the material before it. The assessee contended that the expenses were incurred in the course of business and that the proposed questions required judicial examination under the reference procedure. The High Court accepted that position and directed the Tribunal to submit a statement of the case under section 256(2) of the Income-tax Act, 1961.

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Issues: Whether the questions proposed by the assessee arising from disallowance of advertisement expenses deserved to be referred to the High Court under section 256(2) of the Income-tax Act, 1961.

Analysis: The application was founded on the contention that the Tribunal had wrongly maintained the disallowance of advertisement expenses incurred in the course of business and had declined reference despite the matter raising questions fit for opinion of the High Court. The Court found that the proposed questions required examination and that the refusal to make a reference was not justified on the material placed before it.

Conclusion: The application under section 256(2) was allowed and the Tribunal was directed to submit the statement of the case for the opinion of the High Court.

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