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Issues: (i) Whether the interpretation of the dissolution deed gave rise to a question of law warranting a reference under section 256 of the Income-tax Act, 1961. (ii) Whether question No. 2 sought by the petitioner arose out of the Tribunal's order.
Issue (i): Whether the interpretation of the dissolution deed gave rise to a question of law warranting a reference under section 256 of the Income-tax Act, 1961.
Analysis: The rights and obligations under the dissolution deed required construction of the document to determine whether the continuing partner took over the business as a going concern or only the assets and liabilities upon dissolution. Interpretation of such a document raised a question of law fit for reference.
Conclusion: Yes. The Tribunal ought to have referred the question of law.
Issue (ii): Whether question No. 2 sought by the petitioner arose out of the Tribunal's order.
Analysis: The second question was found not to arise from the Tribunal's order.
Conclusion: No. Question No. 2 did not arise.
Final Conclusion: The original petition was allowed and the Tribunal was directed to state the case and refer the first question for decision, while the second question was declined.
Ratio Decidendi: Construction of a dissolution deed to determine the legal character of the transaction, including whether a business was taken over as a going concern or only its assets and liabilities were transferred, can raise a question of law requiring reference.
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