Validity of guardian-made gifts and genuineness findings raised questions of law, requiring reference to the High Court.

Questions on the validity of gifts made by guardians, the effect of later ratification, and whether the gifts were genuine were treated as questions of law rather than mere questions of fact. The High Court held that there was material requiring legal determination on both the validity of the gifts and the genuineness finding, so the Tribunal should not have refused to state a case. The Tribunal was directed to formulate and refer the questions for the High Court's opinion under section 256(2) of the Income-tax Act, 1961.

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Issues: Whether, in proceedings under section 256(2) of the Income-tax Act, 1961, questions of law arose for reference on the validity of gifts made by guardians and on the genuineness of the gifts.

Analysis: The applications arose from a challenge to the Tribunal's refusal to state a case. The Court held that whether gifts made by guardians were void, whether later ratification affected their validity, and whether there was material to support the finding that the gifts were not genuine were all questions involving legal determination and not mere questions of fact.

Conclusion: Questions of law did arise, and the Tribunal was directed to state the case and refer the formulated questions to the High Court for opinion.

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