Reference jurisdiction bars new tax contentions and settled partner deduction issues when no referable question of law arises.

No referable question of law arose on the allowability of deduction for partners' salary and interest where profits were computed on a net profit rate, as the issue had already been answered by the same court in an earlier reference and was treated as settled on the facts found by the Tribunal. The Revenue's contention based on the proviso to Section 44AD(2) was not entertained because it had not been raised before the Tribunal, and a new point cannot be examined at the reference stage. The reference applications were therefore rejected for want of any question of law.

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Issues: (i) whether, on the facts found by the Tribunal, a referable question of law arose as to the allowability of deduction for salary and interest to partners where profits were computed by applying a net profit rate under Section 40(b) of the Income-tax Act, 1961; (ii) whether the Revenue's contention based on the proviso to Section 44AD(2) of the Income-tax Act, 1961 could be entertained when the assessment stood completed under Section 44AD(5).

Issue (i): whether, on the facts found by the Tribunal, a referable question of law arose as to the allowability of deduction for salary and interest to partners where profits were computed by applying a net profit rate under Section 40(b) of the Income-tax Act, 1961.

Analysis: The question raised was identical to the one already considered in another reference by the same court. The court applied the reasoning and conclusion reached in that decision and treated the point as no longer giving rise to an independent referable legal issue in the present matter.

Conclusion: No referable question of law arose on this issue.

Issue (ii): whether the Revenue's contention based on the proviso to Section 44AD(2) of the Income-tax Act, 1961 could be entertained when the assessment stood completed under Section 44AD(5).

Analysis: The respondent objected that this contention had not been raised before the Tribunal. The court accepted that objection and declined to examine the point further.

Conclusion: The contention was not entertained.

Final Conclusion: The reference applications did not disclose any question of law for opinion and were therefore rejected.

Ratio Decidendi: A reference under Section 256(2) of the Income-tax Act, 1961 is not maintainable where no referable question of law arises from the Tribunal's order, and a new contention not raised before the Tribunal cannot be entertained at the reference stage.

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