Report No. 58

Section 257, Income-tax Act

6.24. Section 257 of the Income-tax Act, to which we have already referred1 provides for a direct reference from the Tribunal to the Supreme Court on an application made in that behalf, if the Tribunal is of opinion that on account of a conflict in the decisions of High Courts in respect of any particular question of law, it is expedient that such a reference should be allowed direct to the Supreme Court. This section was, for the first time, introduced when the Income-tax Act was revisers' in 1961, and its genesis lies in a recommendation of the Tyagi Committe2.

The principal object of the recommendation was to secure uniformity in interpretation. It was represented to the Tyagi Committee that, apart from the delay in disposal, a great deal of hardship was caused to the tax-payers on account of the lack of uniformity in the interpretation put,on the various provisions of the taxing statutes by the assessing and the appellate authorities. The Committee made a recommendation for inserting such a section. It can be invoked after the Tribunal has pronounced its order.

1. Paras. 6.6 and 6.7, supra.

2. Direct Taxes Administration Enquiry Committee Report, (1958-59), p. 93, para. 4.45.

6.25. In terms, this provision (section 257) proceeds on the assumption of an application made either by the assessee or the department under section 256, and consequently, section 258 deals with the power of the High Court and the Supreme Court in regard to the reference made to them. In other words, if a reference is made to the Supreme Court by the Appellate Tribunal under section 257, it would be competent to the Supreme Court to refer the case back to the Appellate Tribunal, if it is satisfied that the statement in the case in question is not sufficient to enable it to determine the question raised.

It also follows that, as a consequence of section 260, the judgment delivered by the Supreme Court would be in the nature of an advisory opinion, it would no doubt be binding on the Tribunal, but it does not amount to a final decision of the case. The Appellate Tribunal has to pronounce its judgment on the point referred to the Supreme Court in the light of the opinion which the Supreme Court may express on that point. Thus, the reference directly made to the Supreme Court is, speaking legally, of the same character as the reference made by the Tribunal to the High Court under section 256.