Reference on poultry sheds as plant must be made when the dispute raises a question of law.

The Supreme Court held that the existence of an earlier High Court decision did not remove the legal issue whether poultry sheds could be treated as "plant" for depreciation at the higher rate applicable to plant. Because the matter turned on a question of law, the High Court ought to have required the Income-tax Appellate Tribunal to state a case and refer the question for decision on merits, including the effect of the prior ruling. The refusal to direct a reference was therefore incorrect, and the impugned order was set aside with a direction that the question be referred to the High Court.

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Issues: Whether the High Court was justified in refusing to require the Income-tax Appellate Tribunal to refer the question whether poultry sheds should be treated as plant for the purpose of allowing depreciation at the higher rate applicable to plant.

Analysis: The order under challenge proceeded on the basis that the Tribunal had followed an earlier High Court decision. The Court held that the existence of that prior decision did not eliminate the legal issue raised in the present case. Since the question involved determination of a question of law, the High Court ought to have called for a reference from the Tribunal and then examined the matter on merits, including the effect of the earlier decision.

Conclusion: The refusal to direct a reference was incorrect. The appeal was allowed, the impugned order was set aside, and the question was directed to be referred to the High Court for decision.

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