Reference under section 256(2) declined where no useful purpose would be served by further enquiry into National Savings Certificates deduction.

A reference under section 256(2) of the Income-tax Act was declined in relation to the assessee's claim for deduction on investment in National Savings Certificates under section 80C(2)(d). The High Court noted that the Tribunal had treated the investment as part of the assessee's common fund and that, on the facts, the precise source of funds was not decisive. Although the Revenue's legal submission had some force, the Court held that a further statement of case would serve no useful purpose, especially given the small amount involved and the practical realities of a salaried taxpayer's finances. The application was therefore rejected.

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Issues: Whether, on the facts, the Revenue's application for a reference under section 256(2) of the Income-tax Act, 1961 should be allowed in relation to the assessee's claim for deduction under section 80C(2)(d) for investment in National Savings Certificates.

Analysis: The assessee had claimed deduction for National Savings Certificates purchased during the relevant assessment year. The Court noted the Tribunal's view that the amounts invested could be treated as coming from the assessee's common fund and that the explanation regarding the precise source of funds was not decisive on the facts. The Court held that, given the smallness of the amount involved and the practical realities of a salaried person's finances, a further reference would serve no useful purpose. It also observed that the legal submission advanced on behalf of the Revenue had force, but that, on the facts and circumstances, the matter did not warrant a statement of case.

Conclusion: The application under section 256(2) was rejected and the request to call for a statement of case was declined.

Ratio Decidendi: A reference under section 256(2) will be refused where, on the facts, no useful purpose would be served by calling for a statement of case and the issue does not justify further enquiry.

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