No referable question of law arose where the proposed tax reference was based on factual findings supported by the record.

The proposed reference under section 256(2) of the Income-tax Act failed because the questions framed were factual in character and did not disclose any referable question of law. The Tribunal had accepted the factual nexus between the expenditure claimed and the earning of share income, and the Revenue did not establish any legal infirmity or perversity in the concurrent findings. As the material on record supported those findings, the High Court rejected the request for a direction to state a case.

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Issues: Whether the Revenue was entitled to a direction under section 256(2) of the Income-tax Act, 1961, for reference of the proposed questions as questions of law.

Analysis: The questions proposed for reference were found to be factual in character. The Tribunal had accepted the factual nexus between the expenditure claimed and the earning of share income, and the Revenue had not established any legal infirmity warranting a reference. The contention that the order was vitiated or perverse was not accepted, as the material on record supported the concurrent findings.

Conclusion: No referable question of law arose, and the request for a direction to state a case was rejected.

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