Section 11 exemption and reference to High Court accepted where an identical question had already been referred earlier

A question arose whether the assessee's entitlement to exemption under section 11 of the Income-tax Act, 1961, and the Tribunal's refusal to state a case under section 256(2), gave rise to a referable question of law. The Kerala High Court noted that the Tribunal had already held the assessee entitled to section 11 exemption, subject to verification of the relevant conditions, and that an identical question had earlier been referred in the assessee's own case on substantially similar facts. The Court held that the question arose from the Tribunal's appellate order and was fit for reference, and directed the Tribunal to state a case and refer the question.

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Issues: Whether the assessee's entitlement to exemption under section 11 of the Income-tax Act, 1961, and the Tribunal's order refusing reference gave rise to a question of law warranting a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The assessment year involved was 1986-87. The Tribunal had held that the assessee was entitled to exemption under section 11, but had remitted the matter to the Income-tax Officer for consideration of whether the conditions for such exemption were satisfied. The Court noted that, in earlier proceedings concerning the same assessee and substantially the same issue, reference of the very same question had already been directed. In that setting, the proposed question was not merely one of factual appreciation but arose from the Tribunal's appellate order and was fit for reference.

Conclusion: The question sought to be referred was held to arise out of the Tribunal's order, and the Tribunal was directed to state a case and refer the question for decision by the Court.

Final Conclusion: The petition succeeded, and the Department obtained a direction for reference of the formulated question to the High Court.

Ratio Decidendi: Where a substantially identical question has already been referred in the assessee's own case on similar facts, the Tribunal's refusal to state a case cannot stand if the question of law is shown to arise from its appellate order.

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