Reference on bad debt deduction question allowed where the proposed question of law arose from the Tribunal's order.

A reference under section 256(2) of the Income-tax Act, 1961 was sought on whether the Tribunal was justified in allowing deduction of bad debt and whether the proposed question of law arose from its order. The High Court found that the question did arise out of the Tribunal's decision and directed the Tribunal to state the case and refer the question for opinion. The Revenue's application therefore succeeded, and the matter was sent for reference on the framed question.

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Issues: Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the assessee's claim for deduction of Rs. 45,370 as bad debt, and whether such question of law arose for reference under section 256(2).

Analysis: The application was made under section 256(2) of the Income-tax Act, 1961, seeking a direction to the Tribunal to state a case on the proposed question. The Court found that the proposed question did arise out of the Tribunal's order and therefore required reference for opinion.

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

Final Conclusion: The Revenue's application for reference succeeded, and the matter was sent for opinion on the framed question.

Ratio Decidendi: Where the proposed question of law arises from the Tribunal's order, the Court may direct a reference under section 256(2) of the Income-tax Act, 1961.

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