1994 (9) TMI 48 - HC - Income Tax

High Court In Directing Reference, Income Tax Act, Jurisdiction Of High Court, Question Of Law, Supreme Court

Summary

Issues:
1. Application under sub-section (2) of section 256 of the Income-tax Act, 1961 for a direction to make a reference to the High Court regarding a question of law.
2. Maintainability of the application in light of settled law.
3. Impact of the grant of special leave petition by the Supreme Court on the requirement for a reference.
4. Nature of powers exercised under sub-section (2) of section 256 of the Act.
5. Consideration of the admission of an appeal in the Supreme Court as a question of law.
6. Relevance of previous judgments in determining the necessity of a reference.
7. Precedents regarding the requirement for a reference when the law point has already been decided.
8. The significance of the substantiality of the question of law in requiring a reference.

Analysis:
The judgment pertains to an application filed under sub-section (2) of section 256 of the Income-tax Act, 1961, seeking a direction for a reference to the High Court on a question of law. The petitioner argued that the grant of a special leave petition by the Supreme Court necessitates a reference. However, the court, citing the Full Bench judgment in CIT v. Sovrin Knit Works [1993] 199 ITR 679, held that the application is not maintainable as the point of law in question has already been settled. The court emphasized that the powers under sub-section (2) of section 256 are advisory and can only require a reference on unsettled legal issues.

Furthermore, the court highlighted that the mere admission of an appeal in the Supreme Court, without a stay on the High Court's judgment, does not automatically mandate a reference under sub-section (2) of section 256. The judgment referenced previous decisions, such as CIT v. Managing Trustee, Jalakhabai Trust [1967] 66 ITR 619 and CIT v. Dharam Pal Shanti Sarup [1978] 114 ITR 411, to support the position that the court should not be concerned with the potential outcome when deciding on a reference application.

The court also cited a Division Bench decision in CIT v. Shiv Parshad [1984] 146 ITR 397, which emphasized that if a legal point has already been decided by the court, issuing a mandamus for a reference would serve no useful purpose. Additionally, the judgment referred to precedents like CIT v. Indian Press Exchange Ltd. [1989] 176 ITR 331 and CIT v. Kerala State Road Transport Corporation Pension and Gratuity Fund Trust [1987] 167 ITR 383 to reinforce the principle that a reference may not be necessary when the answer to the legal question is evident.

Lastly, the judgment invoked the Supreme Court decision in CIT v. Chander Bhan Harbhajan Lal [1966] 60 ITR 188, which established that if a question of law is not substantial and the answer is self-evident, a reference may not be warranted. In this case, given the clarity provided by the Full Bench judgment in Sovrin Knit Works' case [1993] 199 ITR 679, the court concluded that no further action was required, and the application was dismissed for lacking merit.