Law:

Section:

Section 256 of the Income-tax Act, 1961 - High Court - Reference to - Assessment year 1976-77 - Whether High Court has no jurisdiction to answer a new question of law which has not been referred to it for decision particularly when Tribunal had declined to refer that question and assessee having a right to apply under section 256(2) had failed to do so - Held, yes FACTS A flat was purchased in the name of assessee's wife. In the gift deed executed by the assessee in favour of his wife, it was stated that Rs. 50,000 paid as consideration for purchase of the said flat in the name of wife, was gifted by the assessee to his wife and that the assessee had relinquished his right to recover the amount so paid. A dispute arose about the inclusion of Rs. 1,260 in the assessee's income which represented the interest accruing on the rental income of the flat deposited during that period in the bank account of the assessee's wife. The Tribunal held that interest earned by the assessee's wife on the said deposits could be tagged with the income of the assessee. The assessee made an application under section 256(1) to the Tribunal for reference of three questions, namely, (1) Whether the Tribunal could come to the conclusion that the gift was made of cash amount of Rs. 50,000 and not gift of flat. (2) Whether the Tribunal was justified in holding that the said property was purchased in the benami name of the assessee's wife as the property income was being assessed in the hands of the assessee, and (3) Whether interest earned by the assessee's wife on the said deposits could be tagged with the income of the assessee. The Tribunal referred the first question and declined to refer the remaining two questions. On application under section 256(2), an application was made by the assessee for reframing the question referred to the High Court so as to read as follows: "Whether the amount of interest of Rs. 1,260 earned by the assessee's wife on the deposits made by her out of the income earned from the house property could be clubbed in the income of the assessee?" HELD The High Court has no jurisdiction to answer a new question of law which has not been referred to it for decision…

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