Real income finding made deductibility question academic; High Court declined to answer the reference and refused reframing.

Where the Tribunal had finally held that forgone managing agency commission did not form part of the assessee's real income, and that finding was not challenged, the High Court treated a reference confined to deductibility under section 10(2)(xv) of the Indian Income-tax Act, 1922 as academic. The court held that the deductibility issue could not be decided independently once non-inclusion in real income remained undisturbed. It also stated that the reference could not be reframed to introduce a new question on real income, as that would reopen a closed issue.

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Issues: Whether the High Court should answer the referred question on deductibility of the forgone managing agency commission under section 10(2)(xv) of the Indian Income-tax Act, 1922, when the Tribunal had already held that the amount did not form part of the assessee's real income and that finding was not challenged.

Analysis: The Tribunal's order, read as a whole, showed that it decided the matter on the real income principle and held that the remuneration forgone for commercial expediency did not enter the assessee's taxable income. The reference before the High Court attacked only the deductibility aspect under section 10(2)(xv) and did not challenge the Tribunal's finding on non-inclusion in real income. Once that finding remained intact, the deductibility question did not arise for decision and had become academic. The Court also held that the reference could not be reframed so as to introduce a new question on real income, since that would amount to reopening a closed issue.

Conclusion: The referred question was not answered, because it was academic in view of the unchallenged finding that the amount did not constitute the assessee's real income.

Ratio Decidendi: Where the Tribunal has finally held that an amount does not form part of the assessee's real income and that finding is not put in issue, a reference confined to deductibility under section 10(2)(xv) becomes academic, and the High Court may decline to answer it; reframing cannot be used to raise a new unreferenced question.

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