Factual appreciation versus legal reference: customs statement reliability was non-referable, but confiscated gold loss deduction raised a referable legal issue.

A question on the reliability of a customs statement was treated as one of appreciation of evidence and, on that basis, was held not fit for legal reference. By contrast, the claim that the value of confiscated gold biscuits could be deducted as a business loss under section 69A of the Income-tax Act was treated as a question of law arising from admitted facts and therefore referable for opinion. The result was that reference was declined on the factual issue but accepted on the deduction issue.

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Issues: (i) Whether the proposed reference on the reliability of the customs statement raised a question of fact not fit for reference. (ii) Whether the proposed reference on deduction of the value of confiscated gold biscuits as a business loss under section 69A of the Income-tax Act raised a question of law fit for reference.

Issue (i): Whether the proposed reference on the reliability of the customs statement raised a question of fact not fit for reference.

Analysis: The finding that the statement recorded by the customs party was reliable was based on the facts and circumstances found by the Tribunal. The question was therefore one of appreciation of evidence and did not call for a legal reference.

Conclusion: The issue was answered against the assessee, and no direction for reference was made.

Issue (ii): Whether the proposed reference on deduction of the value of confiscated gold biscuits as a business loss under section 69A of the Income-tax Act raised a question of law fit for reference.

Analysis: The entitlement to deduction as a business loss in the setting of confiscation of gold was treated as involving a legal question arising from the admitted facts. The matter was therefore considered referable to the court for opinion.

Conclusion: The issue was answered in favour of the assessee, and the Tribunal was directed to refer the question.

Final Conclusion: The petition succeeded only to the extent of the second question, with the first question declined as purely factual.

Ratio Decidendi: A question resting on factual appreciation and evidentiary reliability is not referable as a question of law, whereas entitlement to deduction as a business loss in the context of confiscated goods may raise a referable legal issue.

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