1996 (10) TMI 16 - HC - Income Tax

Summary

Issues:
- Request to direct the Tribunal to refer a question of law under section 256(2) of the Income-tax Act, 1961.
- Discrepancy in the question framed by the Department and the actual issue considered by the Tribunal.
- Jurisdiction of the High Court to reframe questions in tax case petitions.

Analysis:
The High Court of MADRAS was approached with a tax case petition where the Department sought direction to the Tribunal to refer a question of law under section 256(2) of the Income-tax Act, 1961. The core issue revolved around the entitlement of the assessee to exemption under section 10(22) of the Act, which the Tribunal had granted based on a previous court decision. However, the Department framed the question incorrectly, focusing on exemption under section 11 of the Act, which was not the actual subject matter considered by the Tribunal. The Department's attempt to reframe the question was met with resistance from the court, emphasizing the importance of the question reflecting the true controversy arising from the Tribunal's order.

The court highlighted the preconditions for a reference, emphasizing that a question of law must arise from the Tribunal's order and be raised before and decided by the Tribunal. The court cited various judgments to support the notion that reframing a question should not alter the fundamental issue debated before the Tribunal. While the Department argued for the court's jurisdiction to reframe questions, the court held that it cannot go beyond the scope of the Tribunal's order and must ensure that the question aligns with the actual subject matter considered by the Tribunal.

In the present case, the Tribunal's consideration was centered on exemption under section 10(22) of the Act, contrary to the Department's assertion of exemption under section 11 read with section 13(1)(d) of the Act. The court reiterated that the question framed must correspond to the Tribunal's decision, and any attempt to introduce new issues through reframing would exceed the court's jurisdiction. Ultimately, the court rejected the Department's request to reframe the question, leading to the dismissal of the tax case petition due to the discrepancy between the question suggested and the Tribunal's order.