Reference declined on a low-tax-effect issue, but ordered on the exemption question requiring consideration of governing principles.

A reference on a low-tax-effect question was declined because the issue was already pending in other matters and the governing principles would apply across similar assessments. A reference on the second question was directed because the Tribunal had not examined whether the firm was an industrial undertaking and whether the assessee's interest qualified for exemption under the Wealth-tax Act. The application therefore succeeded only in part, with reference ordered only on the exemption-related question.

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Issues: (i) Whether a reference should be directed on the first question when the tax effect was minimal and the same issue was already pending before the Court in other matters; (ii) Whether a reference should be directed on the second question concerning whether the firm was an industrial undertaking and whether the assessee's interest in it was exempt under section 5(1)(xxxii) of the Wealth-tax Act, 1957.

Issue (i): Whether a reference should be directed on the first question when the tax effect was minimal and the same issue was already pending before the Court in other matters.

Analysis: The Court treated the first question as not requiring consideration in the present case because the tax liability affected was only Rs. 1,100, and the issue was already pending before the Court in other cases. It held that the principles laid down in those matters would govern similar assessments.

Conclusion: The first question was declined for reference.

Issue (ii): Whether a reference should be directed on the second question concerning whether the firm was an industrial undertaking and whether the assessee's interest in it was exempt under section 5(1)(xxxii) of the Wealth-tax Act, 1957.

Analysis: The Court found that the second question required consideration in light of its earlier decisions, including the principles governing section 5(1)(xxxii) of the Wealth-tax Act, 1957, and directed that the Tribunal had not examined the matter on that basis.

Conclusion: The second question was directed to be referred to the Court.

Final Conclusion: The application succeeded only in part, with a reference ordered on the second question alone and refused on the first question.

Ratio Decidendi: A reference under section 27(3) may be declined where the issue is already pending in other matters and the tax effect is negligible, but it may be directed where the question requires consideration of the governing legal principles under the relevant exemption provision.

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