Binding High Court precedent prevails despite pending SLP, so no reference was required on a settled tax question.

A pending special leave petition does not suspend the binding force of an existing High Court precedent. Where the proposed question under section 256(2) of the Income-tax Act was already covered by the same High Court's earlier decision, the Court remained bound to follow that ruling until the Supreme Court took a contrary view. Accordingly, no reference was required on a question that would necessarily be answered in line with binding precedent, and the application was rejected on the merits in favour of the Revenue.

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Issues: Whether an application under section 256(2) of the Income-tax Act, 1961, seeking reference of a question already covered by binding High Court precedent, could be allowed merely because a special leave petition against that precedent was pending before the Supreme Court.

Analysis: The question proposed for reference had already been decided by an earlier decision of the same High Court in favour of the assessee. The pending special leave petition against that decision did not dilute its binding force for the High Court. Until the Supreme Court took a contrary view, the Court was bound to follow its own earlier decision. On that basis, there was no reason to direct a reference of a question that would have to be answered in accordance with the existing binding precedent.

Conclusion: The application was not maintainable on the merits and was rejected; the issue was decided in favour of the Revenue and against the assessee.

Ratio Decidendi: A pending special leave petition does not suspend the binding effect of an existing High Court precedent, and a reference need not be directed when the proposed question is already concluded by that precedent.

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