M/S DALMIA BISCUITS(P)LTD. vs. C.I.T.PATIALA

ITR/134/1989HC Punjab & HaryanaPHHC01022507198922 September 2006Author: MR. JUSTICE RAJESH BINDAL,MR. JUSTICE ADARSH KUMAR GOEL6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal's finding that Shri D.N. Banerjee had appeared before the Income Tax Appellate Authorities and rendered services in connection with proceedings before the Income Tax authorities was a factual conclusion. The Tribunal had also noted that the assessee failed to furnish details of other services rendered by Shri Banerjee. In light of these findings, the expenditure was considered to be covered by the provisions of Section 80VV of the Income Tax Act, 1961, which limits deductions for such expenses. Therefore, the Tribunal was justified in disallowing the portion of the expenditure exceeding the limit prescribed under Section 80VV. The Court found no fault with the Tribunal's decision. The question referred was decided against the assessee and in favour of the revenue.

What were the facts?

The assessee, M/s. Dalima Biscuits (P) Limited, incurred an expenditure of Rs. 30,920/- as retainership fee to Shri D.N. Banerjee, an advocate, for the assessment year 1979-80. The Assessing Officer (AO) observed that Shri Banerjee primarily provided advice on taxation matters and that the assessee failed to provide details of other services rendered. The AO allowed a deduction of Rs. 5,000/- under Section 80VV of the Income Tax Act, 1961, and disallowed the balance. The Commissioner of Income Tax (Appeals) restricted the disallowance to Rs. 10,000/-, allowing relief of Rs. 18,170/-. The Income Tax Appellate Tribunal (ITAT) decided the issue against the assessee, holding that the expenditure was not wholly and exclusively for business purposes and that Shri Banerjee had appeared before Income Tax Appellate Authorities, thus falling under Section 80VV.

What were the issues?

1. Whether the Tribunal was justified in law in holding that even under Section 37(1) of the Income Tax Act, 1961, the retainership fee paid on a monthly basis to Shri D.N. Banerjee, Advocate, was disallowable? (Question of law) Assessee's Contentions: The assessee contended that the retainership fee paid to Shri D.N. Banerjee was for general consultations and advice on various legal matters, not solely for income tax proceedings. They relied on the principle that retainer fees are paid for general consultations and tax planning, and that such fees are to be considered as one entity for entire services kept ready by counsel, as observed in K.L. Poddar and Sons Pvt. Limited v. CIT (1991) 191 ITR 365 (Karnataka). The assessee argued that Section 80VV of the Act was concerned only with representation before authorities/courts, while general consultation is not covered under it. Revenue's Contentions: The revenue, through the AO and the Tribunal's findings, contended that the expenditure was primarily for taxation matters and that Shri Banerjee had appeared before Income Tax Appellate Authorities. The assessee failed to furnish details of other services rendered, thus not establishing that the expenditure was wholly and exclusively for business purposes. The Tribunal's finding that the expenditure was in connection with proceedings before Income Tax authorities meant it was covered by Section 80VV.

Which sections of the Income-tax Act were involved?

Section 37(1),Section 80VV

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No.134 of 1989 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.134 of 1989 Date of decision:22.9.2006 M/s. Dalima Biscuits (P) Limited, Rajpura ....Petitioner versus The Commissioner of Income Tax, Patiala. Respondent. CORAM: HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE RAJESH BINDAL Present: Mr. P.C.Jain, Advocate, for the petitioner. Dr. N.L.Sharda, Advocate, for the respondent-revenue.

JUDGMENT: Following question of law has been referred for opinion of this Court by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dated 15.12.1989 in ITA No.601 of 1984, in respect of assessment year 1979-80:- “Whether the Tribunal, on the nature of the case, was justified in law in holding that even under section 37(1), the retainership fee paid on monthly basis to Shri D.N.

Banerjee, Advocate was disallowable?”

Facts noticed by the Tribunal in the statement of case are that:- “The assessee company incurred on expenditure of Rs.2250/- on fee paid to Shri G.C.Sharma, Sr.Advocate and Rs.30,920/- on account of retainership fee paid to Shri D.N. Banerjee. The Assessing Officer o

The order continues below.

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