Reference under tax law depends on whether the legal issue is already settled by binding precedent.

A question already concluded by the Supreme Court did not require reference under section 256(1) of the Income-tax Act, because the Tribunal was bound by the settled legal position. By contrast, the issue whether interest liability under the Companies (Profits) Surtax Act turned only on the shortfall between advance surtax and assessed surtax remained an unsettled question of law, as neither the Supreme Court nor the jurisdictional court had settled its scope. On that basis, the note states that unresolved questions of law must be referred for opinion, while covered questions need not be reopened.

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Issues: (i) Whether a question already covered by an of the Supreme Court required reference under section 256(1) of the Income-tax Act, 1961. (ii) Whether the question relating to chargeability of interest under section 7(1) of the Companies (Profits) Surtax Act, 1964 raised a referable question of law.

Issue (i): Whether a question already covered by an of the Supreme Court required reference under section 256(1) of the Income-tax Act, 1961.

Analysis: The question whether the assessee could maintain an appeal despite having pursued revision was already governed by an authoritative decision of the Supreme Court. Once the legal position stood settled, the Tribunal was not obliged to refer the same issue for opinion.

Conclusion: The issue did not warrant reference.

Issue (ii): Whether the question relating to chargeability of interest under section 7(1) of the Companies (Profits) Surtax Act, 1964 raised a referable question of law.

Analysis: The Tribunal had proceeded on the basis of the assessee's bona fides and the factual nature of the return and deductions. However, the controlling question was whether, under section 7C(1), the only relevant inquiry was the shortfall between advance surtax paid and assessed surtax. As neither the Supreme Court nor the jurisdictional court had pronounced on the scope of the provision, the issue remained an unsettled question of law requiring reference under section 256(1).

Conclusion: The issue was a referable question of law and ought to have been referred.

Final Conclusion: The application succeeded, and the Tribunal was directed to refer the unresolved question on interest liability under the Companies (Profits) Surtax Act, 1964 for adjudication and opinion.

Ratio Decidendi: Where a legal question under section 256(1) remains unsettled by authoritative judicial pronouncement, the Tribunal must refer it for opinion; a question already concluded by the Supreme Court does not require such reference.

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