TMI Blog2006 (9) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... Sharda, for the Commissioner. JUDGMENT 1. 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?" 2. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he allowed relief to the assessee to the extent of Rs.18,170/-." 3. The Tribunal decided the issue against the assessee. It was held that the assessee failed to establish that the expenditure incurred was wholly and exclusively for the purpose of business. 4. We have heard learned counsel for the parties and perused the record. 5. On general principle, fee paid to professional advisors was allowable. Reference may be made to judgment of the Hon'ble Supreme Court in C.I.T. v. Birla Cotton Spinning and Weaving Mills Ltd. (1971) 82 ITR 166, wherein it was observed (page 171, 172 of 82 ITR) :- "The essential test which has to be applied is whether the expenses were incurred for the preservation and protection of the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91) 191 ITR 365 (Karnataka) that Section 80VV of the Act was concerned only with representation before authorities/court, while the fee could be paid even for general consultation, which is not covered under section 80VV of the Act. Relevant observations are (page 366 of 191 ITR) : - "It is well known fact that retainer fees are paid towards general consultations, may be under particular legislations. A counsel is retained so that the assessee may have the benefit of proper legal advice as and when problems arise. The assessee may also resort to a consultation with the tax consultant for the purpose of tax planning. There may be other questions arising in the course of the assessee's business touching upon the taxation laws. These problem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing authority or the appellate authorities. The expenditure incurred which is not in relation to such proceedings will be admissible as deduction under section 37 of the Income Tax Act provided it is incidental to business and has been incurred for the purpose of earning profits. Major item of expenditure is of Rs.25,769/- on Shir D. N. Banerjee who is standing counsel of the assessee and has been paid retainership fee. In fact, during the course of hearing of the appeal he was present with Shri G. C. Sharma, the learned Senior Advocate. Shri Banerji conceded during the course of hearing before us that he has been appearing before the I. T. Appellate Authorities. The paper-books prepared bears the signatures of Shri Banerjee. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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