Referable question of law arises when factual findings are unclear or retrospective tax amendments affect dividend deduction treatment.

A question is referable where the Tribunal has not recorded definite findings on the relevant facts, as illustrated by the development allowance reserve issue in capital computation. The Tribunal's reliance on an earlier decision, without a clear factual basis, left the matter open for reference. A legal question also arose on exclusion of dividend income under rule 1(viii) of the First Schedule because the impact of retrospective section 80AA and the Supreme Court's dividend-deduction ruling required examination. The Revenue's reference applications were accepted, and the Tribunal was directed to state both questions for the Court.

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Issues: (i) Whether the Tribunal's view on inclusion of the development allowance reserve in the computation of capital gave rise to a referable question of law; (ii) Whether the Tribunal's view that the entire dividend income was excludible under rule 1(viii) of the First Schedule gave rise to a referable question of law.

Issue (i): Whether the Tribunal's view on inclusion of the development allowance reserve in the computation of capital gave rise to a referable question of law.

Analysis: The Tribunal had not recorded a definite finding on the factual basis for inclusion of the entire development allowance reserve, and had merely relied on an earlier decision. In the absence of a clear finding on the relevant facts, the controversy could not be treated as finally concluded at the Tribunal stage.

Conclusion: The issue was a referable question of law.

Issue (ii): Whether the Tribunal's view that the entire dividend income was excludible under rule 1(viii) of the First Schedule gave rise to a referable question of law.

Analysis: The impact of section 80AA of the Income-tax Act, 1961, inserted with retrospective effect, and the effect of the Supreme Court's ruling on dividend deduction, required examination. The Tribunal's conclusion therefore raised a legal question fit for reference.

Conclusion: The issue was a referable question of law.

Final Conclusion: The Revenue's applications for reference were accepted and the Tribunal was directed to state both questions for the Court's decision.

Ratio Decidendi: A question is referable where the Tribunal has not recorded a definite finding on the relevant facts, or where the legal effect of a retrospective statutory amendment remains to be examined.

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