Deduction from incentive bonus and interpretation of section 16 were questions of law, requiring reference.

Questions concerning deduction from incentive bonus under the head "Salaries" and the construction of section 16 of the Income-tax Act were held to raise questions of law, not merely questions of fact, because they required interpretation of the statutory provision and examination of the correctness of the deduction claimed. The High Court therefore erred in declining to call for a reference on the basis that the proposed questions were factual. It ought to have directed the Tribunal to refer the questions for consideration.

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Issues: Whether the High Court was right in declining to call for a reference on the ground that the proposed questions were questions of fact, and whether the questions relating to deduction from incentive bonus under the head "Salaries" and the construction of section 16 of the Income-tax Act were questions of law requiring reference to the High Court.

Analysis: The questions arose from the Tribunal's treatment of deduction from incentive bonus and the proper scope of section 16 of the Income-tax Act. The Court held that the issues were not merely factual because they involved the legal construction of the statutory provision and the correctness of the deduction claimed. The High Court had therefore erred in refusing reference on the basis that the questions were covered as questions of fact.

Conclusion: The questions were questions of law, and the High Court ought to have directed the Tribunal to refer them for its consideration.

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