Reference under section 256(2) cannot cover a new question not raised before the Tribunal or arising from its order.

A reference under section 256(2) of the Income-tax Act, 1961 cannot be directed on a question that was never raised before the Tribunal and does not arise from its order. The Department's proposed issue on the first proviso to section 36(1)(ii) was therefore not referable, because it had not been urged below and would have required fresh factual inquiry, including whether the assessee's establishment was covered by the Payment of Bonus Act and whether the payment was profit bonus. The application was rejected.

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Issues: Whether a reference could be directed under section 256(2) of the Income-tax Act, 1961, on a question that was not raised before the Tribunal and did not arise from its order.

Analysis: The Department sought a reference on the applicability of the first proviso to section 36(1)(ii) of the Income-tax Act, 1961, but that contention had not been urged before the Tribunal and had not been examined in its order. Determining the point would have required further factual investigation, including whether the assessee's establishment was covered by the Payment of Bonus Act and whether the payment constituted profit bonus. A question that is wholly new and not founded on the Tribunal's order cannot be directed to be referred.

Conclusion: The question was not referable under section 256(2) and the application was rejected.

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