Law:

Section:

Section 256 of the Income-tax Act, 1961 - High Court - Reference to - Assessment years 1982-83 and 1983-84 - Whether application under section 256(2) is contemplated only in cases where there is a refusal on part of Tribunal to state a case on ground that no question of law arose and not in cases where rejection of reference application by Tribunal is on ground that it is time-barred - Held, yes FACTS While finalizing the assessment for the relevant assessment years, the ITO disallowed a sum representing part of the interest paid to the directors on their credit balances in the current account under section 40A(8) and the claim of the assessee for depreciation. The Commissioner (Appeals) deleted the disallowance under section 40A(8) and also accepted the claim for depreciation as made by the assessee. The Tribunal restored the disallowance under section 40A(8) but confirmed the order of Commissioner (Appeals), regarding depreciation. The assessee filed the reference applications out of time and sought condonation of the delay in the filing of those applications by attempting to explain the reasons of the delay. The Tribunal, however, rejected the reference applications as time-barred. On application under section 256(2): HELD In order to maintain an application under section 256(2), an application under section 256(1) should have been made after fulfilling the requirements of that provision and on such an application, the Tribunal should have declined to state a case on the ground that no question of law arises. In the instant case, though the rejection of the applications under section 256(1) as time-barred might result in the Tribunal, not stating a case, yet, that could not be construed to be a refusal on the ground that no question of law arose, which was a fundamental requirement to maintain an application under section 256(2). Under section 66(3) of the Indian Income-tax Act, 1922, a specific provision was made to the effect that if an application made under section 66(1) of that Act was rejected on the ground that it was time-barred, the assessee or the Commissioner, as the case may be, may within two months from the date of service of notice of…

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