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TMI Blog1984 (7) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed in both the periods out of legal expenses on the ground that for want of details, there was a disallowance of Rs. 5,280 in respect of the legal expenses in settling claims under the Income-tax Act, 1961 (' the Act '). In fact, the assessee had claimed Rs. 10,280 and the assessing officer had allowed Rs. 5,000 under section 80VV of the Act. This had the effect of disallowing Rs. 5,280. This action of the assessing officer has been upheld by the Commissioner (Appeals). 3. Before us the dispute is against this disallowance of Rs. 5,280 though the ground speaks Rs. 7,280. The details of the expenses which had been claimed are as under : Rs. " Bill No. 76 dated 2-5-1976 of Salve Salve for consultation and drafting of replies to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny case, exceed in the aggregate five thousand rupees." It is the interpretation of the above section that has created controversy in this case. The learned counsel for the assessee, Shri Harish Salve, has very ably presented the case of the assessee before us. He submitted that the limit for allowance placed under section 80VV is not in respect of the expenses incurred in connection with certain proceedings under the Act in the whole year but the restriction is in respect of expenses incurred on any proceedings before the Income-tax Department or the Appellate Tribunal or any Court relating to the determination of any liability under the Act by way of tax, penalty or interest. According to the learned counsel, the proviso to the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal may not go into the vires of a section, it can certainly be persuaded to interpret a particular section in such a manner so as to make it intra vires of the construction. 5. The learned counsel placed before us the interpretation of the words ' any proceedings ' and submitted that in the eyes of law it means judicial business before an authority or a Court including all possible steps in an action from its commencement to the execution of judgment. The learned counsel submitted that each assessment from the beginning till the making of the assessment can be one proceeding whereas each appeal from the beginning till the passing of the appellate order shall be one proceeding. He, therefore, contended that the law should be so int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us, we may briefly refer to the history of the above provision. There used to be some controversy regarding allowance of legal expenses incurred for settling the tax liability as a deduction in the computation of business income. However, there were case laws which ultimately held that such expenses were allowable business expenditure. However, no such deduction was available to persons having income from sources other than business. On the recommendation of the Direct Taxes Enquiry Committee (Wanchoo Committee) this provision was made to allow deduction of expenses incurred by an assessee on income-tax, proceedings subject to a maximum of Rs. 2,000. However, when the Bill was referred to the select Committee, it was thought that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation has been made that the ceiling of Rs. 5,000 was in respect of the expenditure incurred by an assessee in any one previous year. 11. With this background we have to consider the language of the section. In our opinion, the language is very clear and categorical. The proviso emphatically restricts the deduction which cannot exceed in the aggregate Rs. 5,000. In the main section a reference is to a deduction of any expenditure incurred by an assessee in the previous year in respect of such income-tax proceedings. If both the things are read together, it would be clear that the law has placed a restriction for the allowance of such expenses incurred in a previous year. If the intention was otherwise, the law would not use the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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