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Issues:
1. Interpretation of a forward contract for the sale of tea. 2. Determination of tax liability based on the genuineness of the transaction. 3. Application of legal principles in assessing tax liability. Analysis: The case involved an application under section 256(2) of the Income-tax Act, 1961, challenging the order of the Income-tax Appellate Tribunal regarding a forward contract for the sale of tea between the assessee and another company. The Assessing Officer added an amount to the assessee's income, alleging that the contract was a means to understate sale proceeds and reduce tax liability. The Commissioner of Income-tax (Appeals) disagreed, holding the contract to be genuine and deleted the addition. The Tribunal upheld the Commissioner's decision, leading to a dispute over the referral of questions to the High Court. The Revenue sought to refer questions to the High Court, questioning the genuineness of the transaction and the Tribunal's decision to delete the addition. The Tribunal rejected the referral, prompting the present petition. The court considered whether the Tribunal's decision involved a question of law. The Revenue argued that non-consideration of relevant materials constituted a legal issue, while the assessee contended that such consideration must be prima facie established. The court referred to precedent and found that certain crucial points were not adequately addressed by the Tribunal, leading to a conclusion that question No. 1 was referable as a question of law. Regarding question No. 2, the Revenue argued that the agreement for the tea sale was not in proper form, lacking essential clauses. However, the court, citing relevant case law, determined that the genuineness of a transaction is a question of fact, not law. The court examined the agreement and found it to be valid, rejecting the Revenue's argument. Consequently, question No. 2 was deemed a question of fact and not referred to the High Court. In light of the decisions on questions Nos. 1 and 2, the court found that question No. 3 did not arise from the Tribunal's order and, therefore, declined to refer it to the High Court. Ultimately, the court partially allowed the petition, directing the Tribunal to refer question No. 1 for the court's opinion. The court also decided that the annexures to the additional affidavit filed by the Department would form part of the case statement and made no order as to costs. A copy of the judgment would be transmitted to the Income-tax Appellate Tribunal.
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