Binding precedent barred fresh tax reference on section 104 for a company under liquidation

Earlier binding decisions in the same assessee's case had already settled whether section 104 of the Income-tax Act, 1961 applied to a company under liquidation under the control of the official liquidator. Because the identical legal controversy was thus concluded, no referable substantial question of law survived for a fresh reference under section 256(2). The Revenue was therefore not entitled to reopen the issue through another reference application, and the reference application was dismissed as not maintainable.

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Issues: Whether the Revenue was entitled to a reference under section 256(2) of the Income-tax Act, 1961 on the question whether section 104 of the Income-tax Act, 1961 applied to a company under liquidation.

Analysis: The question sought to be referred was already covered by earlier decisions of the same High Court involving the same assessee. Those decisions had held that, in the context of a company under liquidation and the control of the official liquidator, the relevant income-tax consequences stood concluded and the Revenue could not reopen the issue through a fresh reference application. In view of the binding earlier rulings on the identical legal controversy, no referable substantial question of law survived for consideration.

Conclusion: The reference application was not maintainable and was dismissed.

Ratio Decidendi: Where the legal issue sought to be referred is already concluded by binding decisions in the same assessee's case, the court will decline to direct a further reference under section 256(2) of the Income-tax Act, 1961.

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