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Section 256 of the Income-tax Act, 1961 - Reference - Question of fact - Whether no application for reference under section 256 lies in respect of an order made by Tribunal rejecting an application made before it under section 254(2) - Held, yes FACTS For the relevant assessment years, the assessee claimed relief under section 35B(1)(b) in respect of certain expenses incurred. The ITO rejected the assessee's claim. On appeal, the Tribunal held that the assessee was entitled to weighted deduction only on the commission payment. However, as regards the other items no finding was given. Subsequently, the assessee made a miscellaneous application under section 254(2) requesting the Tribunal to rectify the mistake by considering the prayer of the assessee for granting weighted deduction on the other items. The Tribunal rejected the assessee's application on the ground that the assessee had not raised such specific grounds in the appeal. Further, the assessee's application seeking reference was also rejected. On an application under section 256(2) : HELD An application under sub-section (1) or (2) of section 256 lies only with reference to an order made by the Tribunal under section 254(1). If such an order is amended on an application made by the party under section 254(2) then the order as amended substitutes the earlier order made under section 254(1) and becomes an order under section 254(1) and, consequently, a reference application either under sub-section (1) or (2) of section 256 would lie with reference to such amended order. But the case would be entirely different if a miscellaneous application for the rectification of the order made under section 254(1) is rejected by the Tribunal. In such a case the result would be the order made under section 254(1) remains undisturbed and a reference application would have to be made either under section 256(1) or section 256(2) only with reference to such order, for question of law could arise only out of such order. In fact no question of law arises out of an order rejecting an application made under section 254(2). Therefore, no application for reference under section 256(2) lies in respect of an order made by the…

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