2002 (10) TMI 87

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....y the assessee in connection with the writ petition under article 226 of the Constitution for quashing proceeding,; under section 147 of the Income-tax Act, 1961, and obtaining advice from tax experts in regard thereto fell within the purview of section 80VV of the Income-tax Act, 1961?" Since in both the references, pertaining to the assessment years 1976-77 and 1977-78, a common question of law has been referred, these are being disposed of by this common order. Briefly stated the facts leading to the references are: The assessee, an individual, carried on the business of arranging charters for ship owners and earned commission/fees therefrom. While making the assessment for the assessment year 1976-77, the Assessing Officer disa....

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....ion with the writ petition. The assessee's appeal to the Commissioner of Income-tax (Appeals) was unsuccessful. The assessee took the matter for both the assessment years in further appeal to the Tribunal. The Tribunal upheld the assessee's stand that the legal fees paid in each of the years under consideration for filing and prosecuting writ petitions under article 226 of the Constitution, challenging the order of the Income-tax Officer to reopen the assessment for the relevant assessment years, was not hit by the provisions of section 80VV of the Act. While holding so, the Tribunal observed as under: "Keeping in mind the said conditions, can it be said that any legal fees paid by an assessee to a solicitor or lawyer in prosecuting a....

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....he section that an expenditure incurred by an assessee in respect of any proceedings before an income-tax authority, or the Tribunal or any court relating to the determination of any liability under the Act by way of tax, penalty or interest is restricted to Rs. 5,000. Obviously, any expenditure incurred in connection with arty proceedings other than proceedings relating to the determination of liability under the Act would not fall within the ambit of the constricted restriction laid down in section 80VV of the Act. Thus, the short question for consideration is whether the expenditure incurred by the assessee in resisting the action of the Assessing Officer, initiated under section 147/148 of the Act for reopening a completed assessment....