Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - Question of law - Assessee-bank had filed an application under section 256 before Tribunal to refer a question of law - Tribunal, however, refused to refer question on ground that in earlier year also High Court refused to compel Tribunal to make reference under section 256(2) on similar question - Whether in view of fact that leave to appeal to the Supreme Court had been granted against said decision which was pending before Supreme Court, a question of law did arise and, therefore, Tribunal was to be directed to refer question of law in question - Held, yes Facts The assessee filed an application under section 256(2) for compelling the Tribunal to refer a question of law for the assessment year 1977-78 to the High Court after the Tribunal refused to refer the question. In the preceding year 1976-77 an identical question arose and the assessee filed an application for compelling reference, but the same was dismissed as the question of law was concluded so far as the Court was concerned by its decision in State Bank of Travancore v. CIT [1977] 110 ITR 336 (Ker.). Taking support from said decision, the Tribunal in the present case, refused to refer the question of law. The assessee contended that this Court had granted leave to appeal to the Supreme Court against the said decision in State Bank of Travancore's case (supra) and, therefore, it could not be concluded that no question of law arose. Held Even if a question of law arises, if the question is merely academic because the Supreme Court has already declared the law, it remains as a proposition, not as a question of law arising for determination. On the other hand, a question of law, settled by the High Court to which the Tribunal is subordinate may still arise when the same question is pending before the Supreme Court or when the said question is subject to divergent judicial opinion. Even when the question raised may admit of a fresh consideration by the same High Court, a question of law arises under section 256(2). In such case, the question is not whether the Tribunal already bound by the decision of the High Court has decided correctly or not, but…

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