Section 115J interpretation held referable as a question of law, while vires and non-legal issues were refused.

Interpretation of section 115J concerning the computation of book profits and the set-off of earlier years' losses and depreciation was treated as a pure question of law and therefore referable under section 256; reference was directed on those questions. A challenge to the vires and discriminatory nature of section 115J was not referable because it did not arise from the Tribunal's order and lay outside the Tribunal's jurisdiction. A further proposed question was also found not to raise a legal issue warranting reference, so it was refused.

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Issues: (i) Whether questions relating to the interpretation of section 115J of the Income-tax Act, 1961, arising from the assessee's reference application were referable as pure questions of law. (ii) Whether the challenge to the vires and discriminatory nature of section 115J, and the contention that question No. 5 raised a question of law, could be directed to be referred under section 256.

Issue (i): Whether questions relating to the interpretation of section 115J of the Income-tax Act, 1961, arising from the assessee's reference application were referable as pure questions of law.

Analysis: The questions concerning the effect of sub-sections (1) and (2) of section 115J on computation and set-off of earlier years' losses and depreciation involved interpretation of the statute and were, therefore, pure questions of law. The Tribunal's view that such questions were not fit for reference was not accepted.

Conclusion: The questions covered by items 1, 2 and 3 were held to be referable questions of law, and a statement of case was directed to be submitted on them.

Issue (ii): Whether the challenge to the vires and discriminatory nature of section 115J, and the contention that question No. 5 raised a question of law, could be directed to be referred under section 256.

Analysis: The challenge to the constitutionality and discriminatory effect of the provision did not arise from the Tribunal's order and was outside the Tribunal's jurisdiction. Question No. 5 was also not found to give rise to any question of law warranting reference.

Conclusion: Questions 4 and 5 were declined to be referred.

Final Conclusion: The application succeeded only in part, with reference directed on questions 1 to 3 and refused on questions 4 and 5.

Ratio Decidendi: In a reference proceeding, only questions of law arising from the Tribunal's order and within its jurisdiction are referable; constitutional vires challenges and questions not giving rise to a legal issue on the record are not.

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