Question of law on absence of supporting material for Tribunal findings was referable under income-tax law.

A challenge to whether the Tribunal had any material to find that the business belonged to the assessee and that no genuine firm had come into existence was treated as a question of law. The High Court held that where the dispute concerns the existence of supporting material for the Tribunal's factual findings, the issue is referable under section 256(2) of the Income-tax Act, 1961. On that basis, the proposed questions were accepted as questions of law, and the Tribunal was directed to state the case and refer them to the High Court.

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Issues: Whether, on the facts and in the circumstances of the case, questions arose as to the existence of material before the Tribunal for holding that the business belonged to the assessee and that no genuine firm had come into existence, so as to warrant a reference under section 256(2) of the Income-tax Act, 1961.

Analysis: The applications were filed under section 256(2) after the Tribunal rejected the request for reference. The Court, following its decision in the connected matter arising out of the same Tribunal order, held that both proposed questions turned on whether there was any material before the Tribunal to support its findings. Such a challenge to the existence of supporting material raises a question of law fit for reference.

Conclusion: The questions proposed by the applicant were held to be questions of law, and the Tribunal was directed to state the case and refer them to the High Court.

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