Law:

Section:

Section 80VV, read with section 147, of the Income-tax Act, 1961 - Deductions - In respect of expenses incurred in connection with certain proceedings under the Act - Assessment years 1976-77 and 1977-78 - Whether expenditure incurred by assessee in connection with writ petition challenging action of Assessing Officer, initiated under section 147/148 for re-opening a completed assessment, cannot be said to be an expenditure relating to determination of liability under Act, falling within ambit of section 80VV - Held, no FACTS For the assessment years 1976-77 and 1977-78 certain expenses were claimed by the assessee under the head 'Legal expenses', which were incurred in connection with filing and prosecution of writ petition for quashing re-assessment proceedings under section 147 and for making payments as income-tax representation fees to his legal consultant. The Assessing Officer disallowed a certain sum. On appeal, the Commissioner (Appeals) partially allowed the claim of the assessee. On further appeal, the Tribunal allowing the assessee's claim, held that the expenses incurred did not fall within the purview of section 80VV as the said writ proceeding could not be said to be a proceeding relating to determination of liability under the Act. On reference : HELD Any expenditure incurred in connection with any proceedings, other than proceedings relating to the determination of liability under the Act, would not fall within the ambit of the constricted restriction laid in section 80VV. In the instant case, it could be found that the challenge was to unlawful assumption of jurisdiction by the Assessing Officer. Therefore, the action of the assessee, in respect whereof he had incurred expenditure, might be in a matter connected with the proceedings under the Act but these could not be described as proceedings relating to the determination of any liability under the Act by way of tax, penalty or interest, which pre-supposes valid proceedings. In fact that filing of the writ petition or consultations on the issue with the lawyer was an attempt by the assessee to prevent the Assessing Officer from assuming jurisdiction to take fresh proceedings for…

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