1981 (8) TMI 29 - HC - Income Tax

Summary

Issues:
- Refusal by the Tribunal to refer a question of law under s. 256(2) of the Income-tax Act, 1961.
- Interpretation of s. 4 of the Indian Partnership Act, 1932, and ss. 2(23) and 64(1)(ii) of the Income-tax Act, 1961.
- Application of the principles governing the High Court's jurisdiction under s. 256(2) of the Act.

Analysis:

The judgment by the High Court of GAUHATI involved the refusal by the Tribunal to refer a question of law under s. 256(2) of the Income-tax Act, 1961. The applications sought a reference to the High Court regarding the inclusion of minor sons' income from partnership firms in the assessment of the individual assessee under s. 64(1)(ii) of the Act. The Tribunal declined to refer the question, citing that the income of the minors could not be included in the individual assessments of the assessees as kartas of their respective "HUFs." The Tribunal's decision was supported by reported decisions of High Courts, leading to the Revenue filing an application under s. 256(2) of the Act.

The High Court emphasized the importance of the Tribunal's role as the primary authority to refer questions of law arising from its orders. It highlighted that the High Court's jurisdiction under s. 256(2) is advisory and not appellate in nature. The Court noted that it should intervene only if the Tribunal commits a patent error or fails to exercise its jurisdiction under s. 256(1) of the Act. The judgment underscored the significance of a disputed or debatable question of law for reference to the High Court, rather than an obvious or self-evident point of law.

Regarding the interpretation of relevant provisions, the Court clarified that the Tribunal is not obligated to refer cases where it has merely referred to legal provisions and made a definite decision based on those provisions. It distinguished between a "point of law" and a "question of law," emphasizing that a reference is intended for problematic or debatable legal issues. The judgment cited precedents to support the view that a reference is not required for points of law with obvious conclusions or academic nature.

In the present case, the Court found that the Tribunal's decision on the interpretation of law was correct, and there was no debate on the point or need for a second look. The Commissioner did not challenge the correctness of the decisions, and the standing counsel failed to demonstrate any error in the Tribunal's decision. Consequently, the Court upheld the Tribunal's refusal to refer the question, dismissing the applications without costs.