Tax reference confined to garden expenditure deduction, while depreciation cost question was rejected as not arising from the Tribunal order

The article states that an application under section 256(2) was maintainable only to the extent it sought a reference on the allowability of garden expenditure of Rs. 50,000 incurred in the factory compound under section 37(1), because that issue raised a question of law arising from the Tribunal's order. The proposed question on including Rs. 5,000 in the actual cost of an asset for depreciation under section 32 was not entertainable, as it had not been raised before the Tribunal and therefore did not arise out of its order. The reference was accordingly confined to the first question and the second was rejected.

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Issues: Whether the question relating to the allowability of Rs. 50,000 spent on garden expenses in the factory compound as deduction under section 37(1) of the Income-tax Act, 1961 arose out of the Tribunal's order and was referable to the High Court.

Analysis: The application under section 256(2) was maintainable to the extent that the Tribunal's conclusion on the allowability of the garden expenditure under section 37(1) raised a question of law arising from its order. The further question regarding inclusion of Rs. 5,000 as part of the actual cost of an asset for depreciation under section 32 was not entertainable, as no such question had been raised before the Tribunal and therefore it did not arise out of its order.

Conclusion: The reference was directed only on the first question relating to deduction of the garden expenditure under section 37(1); the second proposed question was rejected as not arising from the Tribunal's order.

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