Investment allowance under section 32A raised a referable question of law where relief depended on a pending reference outcome.

The Tribunal's conditional allowance of investment allowance for assessment year 1978-79, made subject to the result of the pending reference for assessment year 1977-78, turned on the interpretation and application of section 32A of the Income-tax Act, 1961. Because the order depended on the legal effect of that provision rather than on facts alone, a referable question of law was found to exist under section 256(2). The matter was therefore treated as fit for reference to the High Court for opinion.

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Issues: Whether a question of law arose from the Tribunal's order allowing investment allowance for the assessment year 1978-79 subject to the outcome of the reference pending for the assessment year 1977-78, so as to warrant a direction for reference under section 256(2).

Analysis: The Tribunal's order made the allowance of investment allowance for the later assessment year depend upon the interpretation and application of section 32A of the Income-tax Act, 1961, and upon the result of the pending reference for the earlier assessment year. Such a conditional disposal necessarily required examination of the legal effect of section 32A and not merely of facts. On that footing, the existence of a referable question of law was established.

Conclusion: A question of law did arise, and the Tribunal was directed to state the case and refer the question for the opinion of the Court.

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