Tax-effect circular does not bar departmental reference when the Revenue elects to pursue it.

A departmental reference application under the Income-tax Act was not barred merely because a circular prescribed a monetary limit for references below the tax-effect threshold. Applying its earlier view, the HC held that such a policy circular does not prevent the Department from pursuing a reference if it elects to do so. The assessee's objection based on the circular was rejected, and the Tribunal was directed to state the proposed questions for the Court's opinion. The reference application was therefore entertained in favour of the Revenue.

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Issues: Whether a departmental reference application under the Income-tax Act could be declined on the ground of a circular prescribing a monetary limit for references where the tax effect was below the threshold.

Analysis: The Court followed its earlier view that a policy circular on tax effect did not prevent the Department from seeking a reference where it chose to do so. The assessee's objection based on the circular was rejected, and the Tribunal was directed to state the proposed questions for opinion of the Court.

Conclusion: The objection based on the tax-effect circular failed, and the reference application was entertained in favour of the Revenue.

Final Conclusion: The application for reference was allowed and the Tribunal was directed to refer the questions framed by the Court.

Ratio Decidendi: A departmental circular prescribing a monetary limit for references does not bar the Court from entertaining a reference application where the Department elects to pursue it.

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