1983 (11) TMI 122 - AT - Income Tax

Summary

Issues:
1. Disallowance of legal charges under section 80VV of the IT Act, 1961.
2. Claim for deduction of contribution to Chief Minister's Relief Fund.
3. Disallowance of interest on gratuity paid to LIC.
4. Claim for interest under section 214 of the IT Act, 1961.

Detailed Analysis:

1. The first issue pertains to the disallowance of legal charges under section 80VV of the IT Act, 1961. The Income Tax Officer (ITO) disallowed a portion of legal charges on the grounds that they exceeded the ceiling specified under section 80VV. The assessee contended that certain payments made to solicitors were not related to appearance before IT authorities and therefore should not be covered by section 80VV. However, the Appellate Tribunal held that the consultations with the solicitors were indeed in connection with income-tax proceedings, making the payments eligible for deduction under section 80VV. Therefore, the Tribunal upheld the order of the CIT (A) in this regard.

2. The second issue involves the claim for deduction of a contribution made to the Chief Minister's Relief Fund. The assessee stated that the contribution was made but the receipt was misplaced, although it was verified by the company's auditors. The Tribunal directed the ITO to examine whether the donation to the Relief Fund qualifies for exemption under section 80G of the IT Act, 1961. If eligible, the ITO was instructed to accept the claim based on the auditor's certificate confirming the donation. This decision was made in the interest of equity and justice.

3. The third issue relates to the disallowance of interest on gratuity paid to LIC. The CIT (A) had already directed the ITO to grant relief to the assessee after verifying the correctness of the claim. The Tribunal found no issue with this direction and refused to interfere with the order of the CIT (A) in this regard.

4. The final issue concerns the claim for interest under section 214 of the IT Act, 1961. The CIT (A) had accepted the assessee's claim and directed the ITO to verify the advance-tax instalments paid by the company in time and grant interest accordingly. The Tribunal noted that the matter of granting interest under section 214 had been considered by the Calcutta High Court in a previous case, and the ITO was advised to consider the court's observations while granting interest to the assessee. Ultimately, the Tribunal partly allowed the appeal in this matter.