Referable question of law on short-term capital gains under tax provisions, with the issue reframed for reference.

A referable question of law arose from the Tribunal's treatment of short-term capital gains under sections 115E and 115C of the Income-tax Act. The High Court found that the proposed question required clearer formulation because no direct decision covered the point, and it reframed the issue to ask whether short-term capital gains fall within the scope of those provisions and whether they constitute investment income under section 115C(c). It accordingly directed the Tribunal to state the case and refer the reframed question for opinion under section 256(2).

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Issues: Whether a referable question of law arose from the Tribunal's order and whether the question proposed by the Revenue required reframing for reference to the High Court under section 256(2).

Analysis: The order records that the controversy concerned the tax treatment of short-term capital gains under sections 115E and 115C of the Income-tax Act, 1961. The Court found that the issue raised a question of law, noted the absence of a direct decision on the point, and held that the question as originally framed was not happily worded. It therefore reframed the question to accurately reflect whether short-term capital gains were included within the scope of sections 115E and 115C and whether such gains constituted investment income within section 115C(c).

Conclusion: The Court held that a referable question of law existed and directed the Tribunal to state the case and refer the reframed question to the High Court.

Ratio Decidendi: Where the Tribunal's conclusion on the tax character of income gives rise to a question of law, the High Court may direct a reference under section 256(2) and may itself reframe the question to accurately capture the legal issue for opinion.

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