Finding that circular conditions were satisfied was factual, so no question of law arose for reference under income-tax procedure.

In an application under section 256(2) of the Income-tax Act, 1961, a reference could not be compelled where the Tribunal's conclusion that the departmental circular's conditions were satisfied rested on appreciation of the record and was therefore a finding of fact. Mere disagreement with that factual finding did not create a question of law. The Revenue's separate objection based on additional evidence under rule 46A of the Income-tax Rules, 1962 was not the issue actually sought to be referred. The application was therefore not maintainable on the question proposed for reference.

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Issues: Whether, in an application under section 256(2) of the Income-tax Act, 1961, a question of law arose for reference when the Tribunal had found as a fact that the conditions for applying the relevant circular were satisfied.

Analysis: The Revenue sought reference only on the question whether the Tribunal was justified in holding that the conditions laid down in the departmental circular had been fully satisfied. The Tribunal's conclusion on that point rested on appreciation of the material on record and amounted to a finding that the requisite conditions for the circular's applicability were fulfilled. Such a conclusion is one of fact. No separate question of law arose merely because the Revenue disagreed with that factual finding. The objection based on reliance upon additional evidence under rule 46A of the Income-tax Rules, 1962 was not the question sought to be referred in the application before the Court.

Conclusion: No question of law arose from the Tribunal's order, and the application under section 256(2) was not maintainable on the issue sought to be referred.

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