Referable question of law absent where charity receipt and notional interest additions turned on settled law and factual findings.

Questions under section 256(2) were held not to give rise to any referable question of law. The addition relating to charity included in the cotton purchase price was covered by Supreme Court authority treating such receipts as non-revenue in nature, so no reference was required. The proposed notional interest addition on debit balances turned on the Tribunal's factual findings that the tax authority produced no supporting evidence and that the assessee's business and financial circumstances did not justify an inference of extra-commercial credit accommodation. On that fact-based assessment, no legal issue arose.

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Issues: Whether, in an application under section 256(2) of the Income-tax Act, 1961, questions relating to deletion of an addition for charity included in the cotton purchase price and deletion of a notional interest addition on debit balances gave rise to referable questions of law.

Analysis: The question regarding charity was already covered by the Supreme Court ruling that such receipts were not revenue receipts and, therefore, did not require reference. As to the estimated interest on debit balances, the Tribunal's conclusion rested on the factual findings that no supporting evidence had been brought by the Income-tax Officer and that the assessee had business and financial circumstances negating the inference of extra-commercial credit accommodation. Whether interest should be added on a notional basis in those circumstances depended on appreciation of facts and did not disclose any legal issue.

Conclusion: No referable question of law arose on either question and the application was dismissed.

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