Law: Income Tax Act, 1922

Section: 10,10(2)(xvi)

Income tax Act (XI of 1922)---S. 10(2)(xvi) Deductions Fees paid to tax advisers by assesses reasonably and bona fidely In conducting legal proceedings before Income tax Appellate Tribunal to reduce tax liability of assessee likely to result In more funds being left for purpose of carrying on its business and thus a possibility of higher profits Such fees, held, admissible deductions within meaning of S. 10(2)(xvi). Smith's Potato Estates Ltd. v. Bolland 1949 I T A (Supplement) ref. Travancore Titanium Product Ltd. v. Commissioner of Income tax, Kerala (1966) 40 I T R 277; Commissioner of Income tax v. Calcutta Landing and Shipping Co. Ltd. (1970) 77 I T R 575; R. B. Bansilal Abirchand Spinning and Weaving Mills v. Commissioner of Income tax Poona (1971) 81 I T R 34; Commissioner of Income tax, West Bengal v. Birla Cotton Spinning and Weaving Mills Ltd. (1971) 82 1 T R 166 SC; Modi Sugar Mills Ltd. v. Commissioner of Income tax (1973) 90 1 T R 201 and Ata Hussain v. Commissioner of Income tax P L D 1969 S C 517 rel. J.K. Cotton Manufacturers Ltd. v. Commissioner of Income tax (1962) 46 I T R 970 distinguished. JUDGMENT K.A.GHANI, J. This reference under section 66(1) of the Income tax Act No. XI of 1922 has been made by the Income tax Appellate, Tribunal at the instance of the assessee. The question of law referred is reproduced below: "Whether on the facts and in the circumstances of this case, the Income tax Appellate Tribunal was justified in holding that a sum of Rs.1,050 being fees paid to the Tax Advisers for conducting appeal before the Tribunal against the assessment orders of the Income tax Authorities was not an allowable deduction under the Income tax, Act, 1922" Parties agree to the statement of the case. The above question has arisen out of the order, dated 7th May, 1974 passed by the Income tax Appellate Tribunal, Karachi in I. T. A. No. 961/K.B of 1972 73 relating to the assessment year. 1968 69. The statement of facts show that the assessment for the charge year 1968 69 ending 31 12 1967 was completed by the Income tax Officer, Companies Circle VX, Karachi under section 23(3) of the Act of 1922 on 31 12 1973. In the accounts for the accounting…

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