Interpretation of deduction provisions justified reference of questions of law on simultaneous or successive computation

Interpretation of deduction provisions under the Income-tax Act was treated as a genuine question of law, because the dispute concerned whether deductions under sections 80HH and 80-I were to be computed simultaneously or successively. The High Court held that such a controversy arose from the Tribunal's order and was therefore referable under section 256(2). The Tribunal should not have ? no, should not have rejected the reference application under section 256(1), and its refusal to state the case was found erroneous. The reference application was allowed, and the Tribunal was directed to refer the questions of law.

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Issues: Whether, in proceedings under section 256(2) of the Income-tax Act, 1961, the Tribunal was justified in refusing to refer the questions of law arising from the order concerning the manner of computing deductions under sections 80HH and 80-I.

Analysis: The application was founded on the contention that the deductions under sections 80HH and 80-I, both falling in Chapter IV-A of the Income-tax Act, 1961, raised a pure question of law as to whether the deductions were to be computed simultaneously or successively. The Court held that the controversy turned on interpretation of the statutory provisions governing deduction and, therefore, the questions proposed did arise from the Tribunal's order. The Tribunal ought not to have rejected the application under section 256(1).

Conclusion: The Tribunal's refusal to make a reference was held to be erroneous, and the reference application was allowed.

Final Conclusion: The legal issue of referenceability was answered in favour of the Revenue, and the Tribunal was directed to state the case and refer the questions of law to the Court.

Ratio Decidendi: Where the controversy concerns the interpretation of deduction provisions and a genuine question of law arises from the Tribunal's order, a reference under section 256(2) of the Income-tax Act, 1961 is warranted.

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