Referability under income-tax law fails where entertainment expenditure and interest on advance tax turn on factual findings, not legal questions.

A question was not referable under section 256 where the disallowance of entertainment expenditure had already been treated as office and factory refreshment expenses for employees and customers, leaving no fresh legal controversy. On the levy of interest under section 216, the record disclosed no material for deliberate underestimation of advance tax, so the issue remained factual rather than legal. As both matters turned on existing findings and not on any substantive question of law, reference was refused and the matter ended against the Revenue.

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Issues: (i) Whether the question relating to disallowance of entertainment expenditure was referable under section 256(1) of the Income-tax Act, 1961. (ii) Whether the questions relating to levy of interest under section 216 of the Income-tax Act, 1961 disclosed any referable question of law.

Issue (i): Whether the question relating to disallowance of entertainment expenditure was referable under section 256(1) of the Income-tax Act, 1961.

Analysis: The expenditure was treated as having been incurred at the office and factory sites for providing tea, coffee, cool drinks and refreshments to employees and customers during office hours. In view of the earlier treatment of similar expenditure and the absence of any fresh legal controversy warranting a reference, the matter did not merit reference.

Conclusion: The question was not referable.

Issue (ii): Whether the questions relating to levy of interest under section 216 of the Income-tax Act, 1961 disclosed any referable question of law.

Analysis: Interest under section 216 depended on whether there was deliberate underestimation of advance tax, and the record disclosed no material supporting such an inference. The controversy was therefore one of fact rather than law, and no referable question arose.

Conclusion: The questions were not referable.

Final Conclusion: The application for reference was refused and the matter ended against the Revenue.

Ratio Decidendi: A question is not referable under section 256 where the determination turns on facts already found, and not on any substantive question of law.

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