Question of law on reference under income tax law accepted where purchases and interest disallowance were disputed.

The controversy over alleged purchases from a non-genuine concern and disallowance of the related interest claim was treated as raising a question of law under the Income-tax Act. Applying the Supreme Court precedent referred to in the text, the High Court found the issue fit for reference under section 256(2) and directed the Tribunal to state the case and refer the questions.

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Issues: Whether a question of law arose from the Tribunal's order so as to warrant a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The application was examined in the light of the material suggesting that the assessee's purchase transactions were alleged to be with a non-genuine concern and that the related interest claim had been disallowed. In view of the principles recognised by the Supreme Court in the cited precedent, the Court held that the controversy gave rise to a question of law fit for reference.

Conclusion: The question of law was found to arise, and the Tribunal was directed to state the case and refer the questions.

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