Academic tax questions will not justify a reference where assessed loss leaves no tax liability.

A reference will not be called on an exemption claim where the assessed loss for the relevant year exceeds the disallowance and no tax liability arises, because the issue does not affect the tax consequence for that year. The High Court applied the principle that it does not entertain academic questions for reference, and the exemption controversy was treated as not surviving for adjudication. The reference application was therefore rejected as purely academic.

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Issues: Whether a reference could be called on the assessee's exemption claim when, for the year in question, the assessed loss exceeded the amount disallowed and there was no liability to tax, rendering the issue academic.

Analysis: The assessed loss as determined left no tax liability for the relevant year. In that situation, the assessee's contention regarding exemption under the claimed provisions did not affect the tax consequence for the year in dispute. The settled principle applied was that a High Court does not call for a reference on an academic question.

Conclusion: The reference application was rejected because the exemption issue was purely academic and did not survive for adjudication.

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