Law:

Section:

Section 256 of the Income-tax Act, 1961 - Reference - General principles - Assessment year 1973-74 - Whether it is open to assessee/revenue in a petition filed under section 256(2) to pray for directing Tribunal to refer a question which was not formulated in application filed before Tribunal under section 256(1) - Held, no Section 256, read with sections 28(i), 71 and 72 of the Income-tax Act, 1961 - Reference - Question of fact - Assessment year 1973-74 - Whether question as to whether assessee carried on any business during year and incurred any business loss which could be set off against capital gains, is a question of fact - Held, yes FACTS For the assessment year 1974-75, corresponding to the accounting year ended on 31-3-1974, the assessee, a cashew dealer, claimed that he had incurred a business loss on the sale of its factory and machinery on 7-9-1973 and prayed for setting off of the same against capital gains. In spite of several opportunities given the assessee did not produce any evidence before the ITO to substantiate his claim and, consequently, the ITO held that the assessee did not carry on any business during the relevant previous year or even if he had carried on any such business, he had no evidence to show that he had suffered any loss in that business. Accordingly, he rejected the assessee's claim for set off of business loss. The AAC as well as the Tribunal confirmed the order of the ITO. The Tribunal also rejected the assessee's application under section 256(1) seeking reference of a question which related to rejection of the assessee's claim for set off of business loss. On an application under section 256(2) the assessee sought reference of two questions in addition to the one formulated in the application filed under section 256(1). HELD The jurisdiction vested in the High Court under section 256(2) is co- equal to the jurisdiction vested in the Tribunal under section 256(1). The High Court is competent to direct the Tribunal to refer to the High Court only that question of law which the assessee requested the Tribunal to refer to the High Court in the application filed under section 256(1). It is not open to a petitioner in a…

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