Revenue loss under section 43A was certifiable, but a vires-based depreciation question was not arising in reference proceedings.

In income-tax reference proceedings, a question on whether an amount was allowable as a revenue loss under section 43A was treated as a proper question of law, and a certificate was directed to issue on that point. By contrast, a proposed question concerning depreciation on assets used for scientific research, where the challenge depended on the vires of clause (iv) of section 35(2), was rejected because a constitutional validity challenge could not be agitated in those proceedings and the question was not regarded as arising from the Tribunal's order. The certificate was therefore granted only on the first question.

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Issues: (i) Whether a certificate should be issued on the question whether the sum of Rs. 5,75,251 was allowable as a revenue loss having regard to section 43A of the Income-tax Act, 1961. (ii) Whether a certificate could be issued on the question of depreciation in respect of assets used for scientific research when the challenge raised involved the vires of clause (iv) of section 35(2) of the Income-tax Act, 1961.

Issue (i): Whether a certificate should be issued on the question whether the sum of Rs. 5,75,251 was allowable as a revenue loss having regard to section 43A of the Income-tax Act, 1961.

Analysis: The application was allowed on this question and a certificate was directed to issue on the stated question of law.

Conclusion: The issue was answered in favour of the applicant.

Issue (ii): Whether a certificate could be issued on the question of depreciation in respect of assets used for scientific research when the challenge raised involved the vires of clause (iv) of section 35(2) of the Income-tax Act, 1961.

Analysis: In proceedings under the Income-tax Act, a challenge to the vires of a statutory provision could not be agitated, and the question was held not to have arisen out of the Tribunal's order.

Conclusion: The issue was answered against the applicant.

Final Conclusion: The application was allowed only to the extent that a certificate was granted on the first question, while the second proposed question was rejected as not arising in the reference proceedings.

Ratio Decidendi: In income-tax reference proceedings, a question that depends on the vires of a statutory provision cannot be treated as arising from the Tribunal's order.

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