Law:

Section:

Section 256, read with section 4, of the Income-tax Act, 1961 - Reference - Question of fact - Assessee claimed that cigarettes of value of Rs. 1,16,500 were distributed free in pursuance of Sales Promotion Free Scheme - ITO held that cigarettes in question were sold by assessee and, accordingly, disallowed assessee's claim - Appellate authorities upheld order of ITO - Whether any question of law arose from order of Tribunal - Held, no FACTS The assessee claimed that the cigarettes of the value of Rs. 1,16,500 were distributed free in pursuance of Sales Promotion Free Scheme. The ITO held that the cigarettes in question were sold by the assessee and, accordingly, disallowed the assessee's claim. Both the first appellate authority and the Tribunal upheld the order of the ITO. The Tribunal also rejected the assessee's application under section 256(1) seeking reference on seven questions, which related to the assessee's claim. On an application for reference under section 256(2): HELD All the lower authorities had recorded a concurrent finding of fact that the cigarettes in question were really and actually sold. No reasons had been shown as to why the said finding of fact should not be accepted, nor it was shown how did a question of law arise from the order of the Tribunal. Accordingly, the assessee's application for reference was dismissed. JUDGMENT Reddy, CJ.-By this application under section 256(2) of the Income-tax Act, 1961 ('the Act') the petitioner seeks to have the following seven questions referred to this Court: "1.Whether the Tribunal was legally correct in upholding the addition to the income of the assessee-firm, Rs. 1,16,500, in the absence of any finding or evidence to the effect that the cigarettes of the 'Sales Promotion Free Scheme' had actually been sold away by the assessee-firm? 2.Whether the finding of the Tribunal and substance of addition of Rs. 1,16,500 being value of 'Sales Promotion Free Scheme' cigarettes for the distributor, are not vitiated in law as the same are based on non-consideration of various facts and circumstances as were relevant for the purpose of deciding the issue before it? 3.Whether there was any material before…

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