Additional surcharge dispute under income tax law can be reconsidered on reference when the statutory issue remains undecided.

A legal contention on additional surcharge could be considered in a reference under section 256(1) where the liability itself was already in issue before the Tribunal, even if that precise argument had not been separately advanced earlier. The court treated the Tribunal's order as raising the broader surcharge question under the Finance Act, 1963, and held that the Revenue's point was open for examination. Because the Tribunal had not decided the surcharge liability on the full statutory basis, the matter was set aside and remanded for fresh consideration of all relevant aspects.

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Issues: (i) Whether, in a reference under section 256(1) of the Income-tax Act, 1961, the Revenue could urge that additional surcharge was leviable even if that precise aspect had not been separately argued before the Tribunal; (ii) Whether the matter required remand because the Tribunal had not decided the question of liability to additional surcharge on the full statutory basis.

Issue (i): Whether, in a reference under section 256(1) of the Income-tax Act, 1961, the Revenue could urge that additional surcharge was leviable even if that precise aspect had not been separately argued before the Tribunal.

Analysis: The question referred to the court was whether the Tribunal was right in deleting the additional surcharge charged for the assessment year 1963-64. The controversy before the Tribunal was the assessee's liability to additional surcharge, and the head of income was only one aspect of that controversy. A question of law referred to the court is not confined to the precise arguments advanced before the Tribunal if the question itself was in issue and arises from the Tribunal's order. The court also noticed that the provisions of the Finance Act, 1963, governing surcharge and residual income had a direct bearing on the issue, and the Tribunal had proceeded on a partial understanding of the statutory position.

Conclusion: The Revenue's contention was open for consideration in the reference.

Issue (ii): Whether the matter required remand because the Tribunal had not decided the question of liability to additional surcharge on the full statutory basis.

Analysis: The court found that the real issue was not merely whether the sum of Rs. 19 was assessable as business income, but whether additional surcharge was attracted under the Finance Act, 1963. Since the Tribunal had not dealt with that question on all relevant statutory aspects, and the liability to surcharge remained a live issue, the proper course was to set aside the order and send the matter back for reconsideration on all relevant points.

Conclusion: The matter was required to be remanded to the Tribunal for fresh consideration.

Final Conclusion: The reference did not result in a final determination of the tax liability on merits, and the Tribunal was directed to reconsider the surcharge question afresh on the full statutory basis.

Ratio Decidendi: In a reference, the court may consider a legal contention arising from the Tribunal's order if the question was in issue before the Tribunal, and where a material statutory issue has not been decided, remand is appropriate for fresh adjudication.

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