1. SALEEM AKHTAR, J.---For the assessm ent years 1975-76 the respondents claimed Rs.6,49,562 paid as interest. The Assessing Officer held that certain interest-free advances were made to the Directors and Associate concern and disallowed the claim of Rs.1,38,409. In appeal the Appellate Assistant Commissioner confirmed the order. However, the Tribunal allowed the appeal and granted the allowance claimed by the respondent.
2. In this case the Assessing Officer had opened the assessment under section 34 and without making proper investigation rejected the sales holding that the gross profit was at low rate. This finding was also set aside by the Tribunal with the following observation:-- "In the present assessm ent we find no such allegation that sales were at a lower rate when conducted on cash or that addresses were not sufficient so as to persue the parties and to contact them. We further find that although the assessing officer annulled the sales and held the Gross Profit rate to be low, yet he never doubted the cost of sales i.e. The purchases or the expenses. All infirmities have crept into the assessment due to the assessing officer's anxiety to save it from getting time-barred. As enough time and opportunity was not extended, we deem it fit to SET ASIDE the assessm ent quo ad hoc for re-examination after due opportunity."
3. The department then filed application for referring the following questions to the High Court:-- "(1) Whether, on the facts and in the circumstances of the case, the learned Tribunal was justified in deleting the addition of interest amounting to Rs.1,38,409 when the capital borrowed was not actually utilised in the assessee's business but given as interest free loans to the directors and sister concerns?
(2) Whether, on the facts and circumstances of the case the Income Tax Appellate Tribunal was justified in setting aside the assessm ent on the point of addition made to the trading results and ordering a fresh scrutiny?"
4. The Tribunal refused to refer mainly on the ground that these were questions of fact and no question of law arose from the order of the Tribunal. The applicant has filed this application under section 136(2) of the Income Tax Ordinance for referring the said questions and for our reply.
5. We have heard Mr. Nasrullah Awan. So far the first question is concerned, it is purely on a question of fact. There is no finding that the borrowed capital was not actually utilized in the assessee's business but given as interest-free loan to the directors and their sister concern. This fact has not been challenged as the question opens with the words "whether on the facts and circumstances of the case" which implies that the facts as determined by the Tribunal have been accepted.
6. Therefore, this question cannot be allowed to be raised. So far as the second question is concerned the assessm ent has been set aside on the finding of fact that no defect has been found in the record and account books of the respondent and the Assessing Officer merely to save the order from being barred by time taken hastily action without any justification and passed the order and case was remanded for re-examination. We do not see any question of law arising from such finding of the Tribunal.
7. We, therefore, dismiss the application.