Reference of question of law requires the issue to have been raised before the Tribunal; new questions were rejected.

A question of law can be required to be referred only if it truly arises out of the Tribunal's order, which in turn requires that the issue was in fact raised and considered before the Tribunal. A question that merely appears possible from the record, but was not argued before the Tribunal, does not satisfy the statutory test. Applying that principle, the Madras HC upheld the Tribunal's refusal to refer new questions, because they had not been raised in the earlier proceedings. The assessee's application for reference therefore failed.

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Issues: Whether a question of law can be said to arise out of the Appellate Tribunal's order for purposes of reference when the question was not raised before the Tribunal.

Analysis: The statutory power to require a reference extends only to a question of law arising out of the Tribunal's order. A question is not treated as arising out of such order unless the order shows that the question had in fact been raised before the Tribunal. The fact that the question may be capable of being suggested from the materials on record is not enough. The Tribunal had therefore been right in holding that the new questions did not arise from its order because they were not argued before it.

Conclusion: The application for reference failed, and the refusal to direct a reference was upheld against the assessee.

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