Reference on sales tax collections as income was allowed because a question of law arose from the Tribunal's order.

A reference was sought on whether sales tax amounts collected from customers at year-end but payable to the Government in the following accounting year could be treated as the assessee's income. The High Court found that this proposed question of law did arise from the Tribunal's order, making it fit for reference under section 256(2) of the Income-tax Act, 1961. The Tribunal was therefore directed to state the case and refer the question to the High Court.

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Issues: Whether a question of law arose from the Tribunal's order so as to warrant a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The application sought a reference on the issue whether the amount collected from customers towards sales tax at the end of the accounting year and payable to the Government in the following accounting year could be treated as income of the assessee. On the facts stated, the Court found that the proposed question did arise from the Tribunal's order.

Conclusion: The question of law was held to arise, and the Tribunal was directed to state the case and refer the question to the High Court.

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