JUDGMENT
1. The Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court :
"Whether, on the facts and circumstances of the case, the Tribunal's finding that payment made to Shri Atma Ram Agarwal, advocate and Dr. R.C. Vaish, chartered accountant were not covered by the provision of Section 80VV is vitiated as the Tribunal had failed to take into account that both of them have represented the assessee in income-tax proceedings ?"
2. Briefly stated the facts giving rise to the present reference are as follows :
The present reference relates to asst. yr. 1977-78. For the assessment year in question, the respondent had claimed a deduction of Rs. 14,615 being legal expenses. While framing the assessment under Section 143(3)/144B of the Act, the ITO disallowed Rs. 5,835 being beyond permissible limit under Section 80VV of the Act. In appeal preferred by the respondent, the CIT deleted addition of Rs. 5,835 by holding as follows :
"4.1 The next ground relates to the disallowance of Rs. 5,835 under Section 80VV.
4.2 The ITO has observed that assessee has spent Rs. 10,835 for income-tax purposes out of which Rs. 5,000 are admissible to the assessee-company under Section 80VV and the rest are disallowed. It was stated on behalf of the assessee that Rs. 5,000 was given to Dr. Ramesh C. Vaish, chartered accountant as retainership fee for advice on company law affairs. Rs. 2,000 were paid to Sri Atma Ram Agarwal, as retainer's fee for company law affairs. It was argued that this payment of Rs. 7,000 cannot be subjected to the provisions of Section 80VV because these are not for purposes of any proceedings under the IT Act, 1961, before any authority.
4.3 The aim of retaining two counsel is to seek advice in respect of company law matters. Such being the position if some advice in respect of income-tax matters is also obtained that will not change the character of the payment being for retainership in respect of company law matters. I am of the opinion that payments to Dr. R.C. Vaish and Sri Atma Ram Agarwal, are not covered by the provisions of Section 80VV. The addition of Rs. 5,835 made by the ITO is, therefore, deleted."
3. The Revenue's appeal before the Tribunal has failed.
4. We have heard Sri A.N. Mahajan, learned standing counsel for the appellant-Revenue, and Sri V. Swarup, learned counsel for the respondent-assessee.
5. Learned counsel for the Revenue submitted that under Section 80VV of the Act, the ITO has rightly disallowed a sum of Rs. 5,835 which was over and above the permissible limit of fee paid to the counsel appearing in income-tax proceedings. The submission is misconceived as the CIT(A) had found that the payment was made to Dr. R.C. Vaish and Sri Atma Ram Agarwal as retainers for giving opinion on company law matters and not for income-tax proceedings and the payment made for income-tax matters was below the permissible limit of Rs. 5,000 which has been affirmed by the Tribunal.
6. We are of the opinion that the provisions of Section 80VV of the Act were not attracted in the present case.
7. In this view of the matter, we answer the question referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.