Reference under income-tax law fails where Tribunal's findings on recoverability and waiver of interest remain purely factual.

A reference under section 256(2) of the Income-tax Act could be made only if the Tribunal's order disclosed a referable question of law. The High Court treated the Tribunal's findings that the assessee had not shown the debtors' financial position to be unsound, had not proved irrecoverability of interest, and had not established commercial expediency for waiver of interest as factual findings based on the evidence. The absence of any agreement to forego interest was also treated as a finding of fact. On that basis, no question of law arose from the order, and the application for reference was dismissed.

---

---

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 Tribunal's view that the assessee had not established that the debtors' financial position was unsound, that the interest had become irrecoverable, or that commercial expediency required waiver of interest, was based on appreciation of the evidence on record. The finding that there was no agreement to forego interest was likewise treated as a factual finding. The application for reference could not succeed unless a referable question of law emerged from those findings.

Conclusion: No question of law arose from the Tribunal's order, and the application under section 256(2) was dismissed.

---