G. KRISHNAMURTHY, SENIOR VICE-PRESIDENT (AS THIRD MEMBER) Order By instant reference application under s. 256 (1) CIT, Delhi (Central)-II, New Delhi requires us toe refer following two questions said to be of law arising out of order of Tribunal dt. 25thNov. 1983 in ITA No. 3913/Del/82: "1. Whether on facts and in circumstances of case, ITAT was correct in law in reducing disallowance under head "Travelling and Conveyance Expenses" from Rs. 61,846 to Rs. 19,000 by ignoring material fact that vehicles were not used for business activities of assessee ?" "2. Whether on facts and in circumstances of case of ITAT w s correct in law in directing that assessee-company be treated as Industrial Company by following order in case of ITO vs. Hydle Construction Pvt. Ltd. in which matter on this issue has just been set aside and restored to ITO and no findings have been given with regard to status of company ?" Since it appears to us that no referable question of law arises out of aforementioned order of Tribunal, we decline to make statement of case. 2. In asst. yr. 1977-78, respondent limited company engaged in business of constructing multi-storeyed buildings had claimed expenditre of Rs. 74, 726 under head "Travelling conveyance, Motor Vehicle Maintenance Expenses". break-up of these expenses were as follows : 1. Conveyance Expenses Rs. 45,862 2. Repair of cars Rs. 25,450 3. Travelling Rs. 3,414 Out of these ITO had disallowed Rs. 61,846 and thereafter when matter was taken up in appeal CIT (A) had upheld disallowance. When matter came up in further appeal Tribunal found firstly, that as matter of fact assessee s business involvement s had not decreased even though 95 per cent of its assignment to construct "Saga Apartments" at Tilak Marg, New Delhi had already been achieved. This finding of Tribunal was based on examination of balance sheet of assessee-company and on going through note which had been submitted before CIT (A) during appellate proceedings. In other words, Tribunal found that lower two authorities were not correct in holding that assessee s business activities in t h e asst. yr. 1977-78 were on very nominal scale. Thereafter Tribunal proceeded to examine details of expenses under above mentioned heads as have been furnished by assessee as part of its paper book. It was found once again as matter of fact that apart from items which had been mentioned in assessment order there were no other expenses which could be described as inadmissible in nature. ld. Departmental Representative had also not been able to pin-point other items of inadmissible nature besides those which had been mentioned in assessment order. Tribunal further found as fact that some of expenses which have been included in list of in admissible in assessment order were not in fact, inadmissible. Over and above Tribunal also considered decision of Tribunal in asst. yr. 1978-79 where reasonable extent of inadmissible expenses under above heads had been fixed at 25 per cent. It was after thus examining matter in all its aspects that Tribunal gave finding of fact that estimated sum of Rs.19,00 could be attributed tot be of inadmissible nature. According to this was pure finding of fact and therefore first question as proposed by CIT is rejected. With regard to second question it had been repeatedly stated by ld. counsel for respondent on 25thMay 1984, 8thJune 1984 and 15thJune 1984 when reference application under consideration had been fixed for hearing that decision of Special Bench of ITAT, Delhi dt. 20thOct. 1983 in case of ITO vs. Hydle Constructions Pvt. Ltd. New Delhi (supra) had been accepted by Department and that no reference had been sought by CIT in so far as finding had been given therein that company involved in construction work would be Industrial Company . Every time on above mentioned dates Departmental Representative had been requested to ascertain and let us know as to whether abatement made by ld. counsel for respondent was correct or not. Ultimately it has been told on behalf of Department that no information in that regard is available. In circumstances when representative of Revenue has failed to give us necessary information we will accept statement made by ld. counsel of respondent as statement at bar and hold that since Department have accepted correctness of aforesaid decision of Special Bench of ITAT, second question as proposed by CIT also ceases to be referable question of law. 3. In result reference application filed by CIT is rejected. 31st Aug. 1984 I have benefit of going through detailed order prepared by my ld. brother Shri B. Gupta, but regret my inability to fully agree with conclusion arrived at. facts have in detailed been discussed in said order. revenue raised two question. Question No. 1 pertains to deletion of certain disallowance s and question No. 2 pertains to issue as to whether assessee-company be treated as industrial company. My ld. brother by said order has rejected reference application. So far as question No. 1 is concerned, there appears to be no difficulty. Therefore reference appears to have been rightly declined. As far as question No. 2 is concerned, I am of considered view that it is definitely reasonable question of law and reference thereof cannot be refused. 31st Aug. 1984 ORDER UNDER S. 255(4) OF IT ACT, 1961 It is seen that difference of opinion has arisen, Therefore, by this order under s. 255(4) of IT Act, 1961, point of difference is being stated and file is being placed before worthy Sr. Vice-President, for purpose of being placed before worthy President, for proceeding in terms of sub-s. (4) of section 2. question No. 2 raised by Revenue is to following effects : "Whether on facts and in circumstances of case, ITAT was correct in law in directing that assessee-company be treated as Industrial Company by following order in case in ITO vs. Hydile Construction Pvt. Ltd. in which matter on this issue has just been set aside and restored to ITO and no findings have been given with regard to status of company ?" 3. point of difference is as under : "Whether question No. 2 referred to above is referable question of law and warrants reference in given circumstances ?" 24 th Oct. 1985 On point of difference of opinion between ld. Members, who heard this reference application, matter was referred to me as Third Member by my President under s. 255 (4). point of difference of opinion referred to me is : "Whether question No. 2 referred to above is referable question of law and warrants reference is given circumstances ?" question referred was : "Whether, on facts and in circumstances of case, Tribunal w s correct in law in directing that assessee-company be treated as industrial company by following order in case of ITO vs. Hydle Construction (P) Ltd. (supra) in which matter on this issue has just been set aside and restored to ITO and no findings have been given with regard to status of company ? 2 . Before I go to question referred for reference and point of difference of opinion it is necessary to briefly narrate facts that led to filing of reference application. assessee is private limited company engaged in construction of apartments. During course of assessment claim was made on behalf of company that it was industrial company within meaning of Act and it is to be subjected to lower rate of taxation. ITO did not deal with this point but several other disallowance s were made objecting to which assessee carried matter by way of appeal before Tribunal. After dealing with all these disallowance s, Bench with regard to claim of assessee-company as industrial company observed under : "Lastly, we find that assessee-company which was engaged in business of constructing multi storeyed buildings would be entitled to be treated as industrial company in view of Special Bench decision of Tribunal dated 20thof Oct. 1983 in case of ITO vs. Hydle Constructions (P) Ltd. (supra). That decision had been made available to us by learned counsel and we find that decision would squarely apply to appellant-company also. We accordingly direct recalculation of income tax demand in case of appellant on basis that it was "industrial company". Subsequently, miscellaneous application was filed by ITO before Tribunal by pointing out that ground that assessee should be assessed s industrial company did not arise out of orders passed by lower authorities and, therefore, Tribunal should not have decided that ground. Tribunal found that this ground was very much raised before CIT (A) but he failed to decide it. Since matter did not involve any investigation Tribunal decided ground on merits gave above direction. When situation became clear Departmental Representative withdrew miscellaneous application. Subsequently Department filed reference application raising two questions of which question No. 2 was already extracted above. I am not in this matter concerned with question No. 1. Tribunal heard this reference application. It held that question No. 1 was pure question of fact and was not question of law. There was no difference of opinion between ld. brothers on this issue. With regard to question No. 2 ld. Accountant Member observed that Bench had only followed Special Bench order of Tribunal in case of ITO vs. Hydle Constructions (P) Ltd. (supra) and that it was brought to notice of Bench that Department had accepted that decision of Special Bench and no reference application was filed and when this was put to Departmental Representative for clarification and even thought matter was adjourned three times., no clarification was furnished. Therefore, Bench had to presume that what was stated on behalf of assessee at bar must be taken as correct. Following that view ld. Accountant Member held that since Department accepted correctness of decision of Special Bench, second question ceased to be referable question of law. He, therefore, dismissed reference application. But ld. Judicial Member was different view. In short order ld. judicial Member while expressing his agreement with conclusion of ld. Accountant Member on first question held that as far as question No. 2 was concerned, he was of considered view that it was definitely referable question of law and reference thereof should not be refused. It was on account of this difference of opinion that matter was referred to president who in turn referred matter to me. 3. Now point is whether question No. 2 extracted above is question of law or not arising out of order of Tribunal as referable question of law. To decide this question in case what is more important is what was attitude and reaction of Department in regard to Special Bench decision, which was followed by Members of Bench. It is now common ground that no reference application was filed by Department raising any question of law as arising out of decision of Special Bench of Tribunal referred to above. This means principles enunciate by Special Bench in that order were accepted by Department. It is no doubt that Special Bench remitted matter to ITO for further enquiry bout further enquiry was not on question as to whether assessee-company was industrial company or not but on question whether requirement of law that industrial company should derive income mainly from activities which made it industrial company were present or not. If income from those activities formed major portion of income then company could be regarded as industrial company. Otherwise even industrial company would not be entitled to benefit of lower rate of tax. it is to find out this factual position as to whether its income was mainly from this activity or not that matter was remitted to ITO but matter whether construction company engaged in construction of multi-storeyed buildings as industrial company or not was decided by Tribunal in favour of assessee and on this issue matter was not referred to ITO at all. Having decided this principle and to satisfy whether further requirements of law, namely creating provisions etc. were satisfied or not matter was sent back to ITO for verification of factual matters. That doesn t mean that Tribunal did not decide in principle question whether assessee-company is industrial company or not. Department having accepted in principle that portion of order of Tribunal, cannot be said to be aggrieved by order passed by another Bench of Tribunal which only followed view expressed by Special Bench. Even here also direction given by Bench was that ITO should calculate tax treating assessee-company as industrial company which means that he should go into those requirements, otherwise calculations of tax may be difficult. It is therefore, incorrect on facts to say that Special Bench in case of Hydle Construction (P) Ltd. (supra), did not decide principle as to status of company which is engaged in construction of multi-storeyed buildings. It is this aspect that ld. Accountant Member has highlighted by pointing out in his order that Department having accepted correctness of decision of Special Bench in case of Hydle Construction (P) Ltd. (supra), it could not be aggrieved by decision given by Bench and, therefore second question as proposed by CIT ceased to be referable question of law. I also do not find any reason given by learned Judicial Member as to how he arrived at conclusion that question No. 2 was definitely referable question of law. With acceptance of Special Bench decision by Department that question ceased to be question of law needing opinion of High Court. opinion of case High Court is needed only when there is dispute subsisting. When no dispute subsists or survives there is no need for opinion. I am, therefore, in agreement with view expressed by ld. Accountant Member that second question is not referable question of law and, therefore, no reference be given on that question. 4 . matter will now go back to Bench, which heard reference application originally for disposal according to majority opinion. *** COMMISSIONER OF INCOME TAX v. SEQUOIA CONSTRUCTION (P) LTD.