Binding precedent governed exemption under section 11(2) and upheld the Form No. 10 time-limit.

The Madras HC noted that entitlement to exemption under section 11(2) of the Income-tax Act was governed by an earlier binding decision and followed that precedent, holding the assessee entitled to the exemption. It also treated the challenge to paragraphs 2 and 4 of Form No. 10 of the Income-tax Rules, which prescribe the time-limit, as covered by the same prior ruling and held the time-limit not invalid. The reference was answered in favour of the assessees on the questions decided, while the remaining question was left unanswered because it did not arise from the Tribunal's order. The stated principle is that a reference is answered consistently with binding precedent and only on questions properly arising from the order under reference.

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Issues: (i) Whether the assessee was entitled to exemption under section 11(2) of the Income-tax Act, 1961. (ii) Whether paragraphs 2 and 4 of Form No. 10 of the Income-tax Rules, 1962, prescribing the time-limit, were beyond the rule-making authority.

Issue (i): Whether the assessee was entitled to exemption under section 11(2) of the Income-tax Act, 1961.

Analysis: The question was covered by an earlier decision of the Court, which was followed for the present reference.

Conclusion: The assessee was held entitled to the exemption under section 11(2).

Issue (ii): Whether paragraphs 2 and 4 of Form No. 10 of the Income-tax Rules, 1962, prescribing the time-limit, were beyond the rule-making authority.

Analysis: The question was also covered by the earlier decision of the Court and was answered on the same basis.

Conclusion: The time-limit prescribed in paragraphs 2 and 4 of Form No. 10 was held not to be invalid.

Final Conclusion: The reference was answered in favour of the assessees on the decided questions, while the remaining question was left unanswered as not arising from the Tribunal's order.

Ratio Decidendi: Where an issue is covered by binding precedent, the Court will answer the reference consistently with that precedent; a question not arising from the Tribunal's order is not answerable in reference jurisdiction.

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