Rectification order cancelled, interest demand became academic and no reference was required under income-tax law.

Once the rectification order under section 154 ceased to exist after its cancellation was sustained, the interest included within that order under section 139(8) could not survive independently. The High Court treated the proposed question on the Tribunal's direction to the Commissioner (Appeals) as academic because no live controversy remained after the underlying order had been set aside. The ground relating to interest was also regarded as valid only because the rectification order itself had specifically provided for such interest. No reference was required, and the application under section 256(2) was dismissed.

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Issues: Whether a question regarding the Tribunal's direction to the Commissioner of Income-tax (Appeals) to decide a ground relating to interest under section 139(8) of the Income-tax Act, 1961, survived after the rectification order under section 154 of the Income-tax Act, 1961, had been cancelled.

Analysis: The rectification order had already been cancelled by the Commissioner of Income-tax (Appeals) and that cancellation had been sustained by the Tribunal. Once the entire rectification order ceased to exist, the interest included in the total tax under that order could not stand. In that situation, the proposed question no longer raised any live controversy and had become academic. The ground relating to interest was also treated as valid because the rectification order itself had specifically provided for such interest.

Conclusion: The question was academic and no reference was required. The application under section 256(2) of the Income-tax Act, 1961, was dismissed.

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