- (1.) THE following question of law has been referred for the opinion of this Court by the Tribunal, Chandigarh Bench, 80 : "Whether the Tribunal, on the nature of the case, was justified in law in holding that even under s. 37(1), the retainership fee paid on monthly basis to Shri D. N. Banerjee, advocate, was disallowable -
(2.) THE facts noticed by the Tribunal in the statement of case are that : "The assessee company incurred an expenditure of Rs. 2,250 on fee paid to Shri G. C. Sharma, senior advocate, and Rs. 30,920 on account of retainership fee paid to Shri D. N. Banerjee. The AO observed that in the immediately preceding assessment year, Shri D. N. Banerjee had rendered advice on taxation matters only and had been sending the bills to the company relating to income -tax matters for the asst. yr. 1979 -80 under appeal. It was contended before the AO that Shri D. N. Banerjee was an advocate and had rendered advice on other matters also. The AO, however, observed that copies of the bills of Shri D. N. Banerjee showed that they were for advice rendered on various legal matters and the details of the advice given or assistance rendered were not made available. On the other hand, the company was paying retainership fee to other advocates like Shri Madan Lal Gupta, S.I. Aggarwal and P.P. Bedi who advised the company on labour matters. He further noted that even the fee given to Shri G.C. Sharma who is a known advocate in income -tax matters was for consultations made with Shri D. N. Banerjee. In view of the above facts, the AO came to the conclusion that Shri Banerjee was paid retainership fee for taxation matters only. He, therefore, considered the allowability under s. 80VV of the IT Act and allowed the maximum deduction of Rs. 5,000 admissible thereunder and the balance of Rs. 28,170 was disallowed. On appeal, the CIT(A) for the discussions made in para 2 of his order restricted the disallowance to Rs. 10,000. In other words, 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. We have heard learned counsel for the parties and perused the record.;