Referable question of law fails where precedent governs remuneration disallowance and sulphur shortage turns on factual findings.

A question is not referable under section 256 of the Income-tax Act, 1961 where the issue is already covered by binding precedent or where the Tribunal's conclusion rests on a pure finding of fact. The Kerala High Court noted that the managing director's remuneration had earlier been held to fall under section 40A(5), leaving section 40(c) inapplicable, so no fresh question of law arose from the disallowance. It also held that the Tribunal's restriction of the sulphur shortage claim to 2.5% of the quantity handled was a factual determination, not a legal issue requiring reference.

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Issues: (i) Whether the disallowance of part of the managing director's remuneration gave rise to a referable question of law under section 256 of the Income-tax Act, 1961. (ii) Whether the disallowance of the claim for loss on shortage of sulphur raised a referable question of law.

Issue (i): Whether the disallowance of part of the managing director's remuneration gave rise to a referable question of law under section 256 of the Income-tax Act, 1961.

Analysis: The same assessee's claim for earlier years had already been examined, and it was held that remuneration paid to the managing director was governed by section 40A(5) and that section 40(c) had no application. In view of that binding decision, the question whether the disallowance was justified did not present a fresh referable issue of law.

Conclusion: The question was not referable and was answered against the assessee.

Issue (ii): Whether the disallowance of the claim for loss on shortage of sulphur raised a referable question of law.

Analysis: The Appellate Tribunal restricted the allowance to 2.5% of the total sulphur handled on the basis of the materials on record. That determination was one of fact and did not involve any legal principle requiring reference.

Conclusion: No referable question of law arose and the issue was decided against the assessee.

Final Conclusion: The original petition failed, and the prayer for reference was rejected in entirety.

Ratio Decidendi: A question is not referable under section 256 of the Income-tax Act, 1961 where it is already covered by binding precedent or where the Tribunal's determination is a pure finding of fact unsupported by any substantial legal issue.

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