P.S. DHILLON, J.M. A. KALYANASUNDHARAM, A.M. CH.G. KRISHNAMURTHY, SENIOR VICE PRESIDENT ORDER Revenue has preferred this appeal against order dt. 29th July, 1983 of Shri Ashwani Kumar, AAC, who partly allowed appeal against order dt. 21st March, 1983 of Shri Mukesh Bhanti, ITO. 2. relevant facts, in brief, are : that assessee is HUF (specified). previous year relevant for asst. yr. 1980-81 ended on Diwali 1979. assessee filed return of income and thereby made claims, inter alia, for sum of Rs. 6,505 including consultation fee paid to Shri S. P. Mehta amounting to Rs. 3,950. 2. 1 ITO disallowed this amount under s. 80VV of IT Act, 1961 ( Act ). 3. In appeal, AAC allowed it on ground that it was in nature of general consultation and hence to be allowed as one of business expenditure. 4. Revenue being aggrieved has preferred this appeal. In this appeal only ground is that AAC has erred in holding that consultation fee of Rs. 3,950 paid to Shri S. P. Mehta does not fall within purview of s. 80VV and that it is admissible as business expenditure. In supporting appeal, Shri Saxena, learned Departmental Representative, contends that provisions and, therefore, claim of assessee is to be allowed under it and not under general provisions of s. 80VV are specific or special provisions of s. 37 of Act. Reliance is placed on decision of Supreme Court in case of CIT vs. Birla Cotton Spg. & Wvg. Mills Ltd. (1971) 82 ITR 166 (SC). 4. 1 On other hand, Shri Ranka, learned counsel for assessee, contends that impugned order is justified and calls for no interference. 5. We have heard rival submissions and have gone through record before us, and have gone through decision of their Lordships of Hon ble Supreme Court in case of Birla Cotton Spg. & Wvg. Mills Ltd. (supra), which supports Departmental viewpoint. 5. 1 It is settled law that specific provision of section overrides general provisions of Act or section. Therefore following it with respect, we hold that s. 80VV is to be applied strictly as these are specific and special provisions for allowing claim of assessee for expenses expended as payment to persons belonging to legal profession for consultation and prosecuting proceedings before IT authorities to reduce tax liability. provisions of s. 80VV has laid down limit for such expenses, i.e., Rs. 5,000. Therefore, assessee is entitled to this amount as deduction. Furthermore, there is amendment which is there in s. 40A of Act vide Finance Act, 1985 and Parliament has taken away even this relief to assessee, which proves intention of Parliament vis-a-vis for allowance of such legal expenses. No doubt, this amendment is not applicable to assessment year under consideration but it makes clear intention of Parliament that legal expenses are to be allowed as are prescribed under s. 80VV. It is settled law that for interpretation of provisions of Act or section, succeeding amendment is proof for intention of legislature. Furthermore, continuously majority of Benches of Tribunal are taking view that legal expenses, whatever these are, to be allowed to extent of Rs. 5,000 only under s. 80VV. Therefore, in view of our above discussions and reasons thereto, we hold that assessee is entitled to expenses of Rs. 5,000 and nothing more. Accordingly, we modify impugned order and allow deduction to assessee to extent of Rs. 5,000. 6. In result, appeal is partly allowed. I have gone through order of my learned brother and I am unable to accept his observations. This issue was in connection with claim of legal expenses, details of which are as under : Rs. 1. Legal fee to Rathore & Co. 2,000 2. Appeal fees 430 3. Consultation fee to S. P. Mehta & Co. 3,950 4. Tribunal fee 125 6,505 assessee had contested before ITO that Rs. 3,950 paid to S. P. Mehta & Co. is for general consultation and was not in connection with any proceedings before any IT authority or Tribunal or any Court relating to determination of any liability under this Act, by way of tax, penalty or interest and, therefore, same should be allowed as business expenditure. claim of assessee was rejected. In appeal, learned AAC upheld contentions of assessee and allowed claim. Before us it was argued that ITO s action was justified and reference was also made to s. 40(a) (ii) of Act according to which such payments which are incurred for determination of tax, etc., are to be disallowed and, thus, action of ITO was justified. 2. Sec. 40(a) (ii) reads as under : "Notwithstanding anything to contrary in ss. 30 to 39, following amounts shall not be deducted in computing income chargeable under head Profits and gains of business or profession , (a)(i)** ** ** (ii) any sum paid on account of any rate or tax levied on profits or gains of any business or profession or assessed at proportion of, or otherwise on basis of, any such profits or gains;" 3 . Sec. 80VV reads as under : "In computing total income of assessee, there shall be allowed by way of deduction any expenditure incurred by him in previous year in respect of any proceedings before any IT authority or Tribunal or any Court relating to determination of any liability under this Act, by way of tax, penalty or interest: Provided that no deduction under this section shall in any case, exceed in aggregate five thousand rupees." According to s. 40(a) (ii), any amount that is paid as tax and which has characteristic of tax, assessee shall be allowed same as business expenditure. Sec. 80VV is intended for allowing of such legal expenditures as deductions which are incurred by assessee for appearance before IT authorities, etc. general consultation under no circumstances can be said to fall under category of appearance before any IT authority or any Court, as counsel is not Court. I am, therefore, of view that general consultation made with counsel would be outside purview of s. 80VV and same is rightly allowable as such. In result, I uphold order of AAC and allow appeal of assessee. THIRD MEMBER ORDER learned Members of Jaipur Bench had difference of opinion, as t o whether consultation fee paid to firm of advocates could be allowed as deduction in computing income of assessee. 2 . assessee, HUF, carrying on business at Jaipur claimed, inter alia, that following sums paid to various persons should be allowed as deduction in computing its income for asst. yr. 1980-81 : Rs. 1. Legal fee to Rathore & Co. 2,000 2. Appeal fees 430 3. Consultation fee to S.P.Mehta & Co. 3,950 4. Tribunal fee 125 6,505 ITO disallowed claim in its entirety on ground that expenditure was in nature of expenses incurred before IT authorities and, therefore, covered by provisions of s. 80VV. There was then appeal before AAC. AAC after going through merits of case found that amount paid to S. P. Mehta & Co. of Rs. 3,950 was not in connection with any income-tax proceedings and, therefore, not covered by provisions of s. 80VV and that provisions of s. 80VV apply to items 1,2 and 4 alone. On this view he directed amount of Rs. 3,950 to be allowed as business expenditure under s. 37 and items 1, 2 and 4 under s. 80VV itself as total of those three amounts was below Rs. 5,000. Thus, entire amount was to be allowed as deduction as per order of AAC. It was aggrieved by this order that further appeal was filed before Tribunal (sic) by Revenue urging that AAC was not justified in allowing consultation fee of Rs. 3,950 paid to S. P. Mehta & CO., as item falling without purview of s. 80VV. learned judicial Member was of opinion that when specific provision. was made in statute, that provision should previal over general provision. Following that principle of interpretation as enunciated by Supreme Court in Birla Cotton Spg. & Wvg. Mills Ltd. s case (supra), he held that s. 80VV alone should be applied as that was specific and special provision for allowance of expenditure of this nature. As that section provided for allowance of Rs. 5,000 only and nothing more, he held that only sum of Rs. 5,000 should be allowed and balance should be disallowed. But learned Accountant Member was of opinion that view taken by AAC was correct and entire amount should be allowed. He held categorically that general consultation made with counsel fell outside purview of s. 80VV and if any amount was incurred by way of fees for general consultation, that should be allowed as deduction under s. 37. As there was difference of opinion between two learned brothers on this issue, point of difference of opinion was referred to President under s. 255(4) of Act, who is pleased to nominate me as Third Member. point of difference of opinion referred by learned Members for opinion of Third Member is : "Whether general consultation fee of Rs. 3,950 paid to S. P. Mehta & CO. could be said to be covered by s. 80VV though it is not incurred in relation to any proceeding before any IT authority or Tribunal or any Court relating to determination of any liability under IT Act, 1961 by way of tax, penalty or interest ? Whether such general consultation fee paid could be allowed as business expenditure under s. 37 of Act and is not attracted by s. 40(a) (ii) of Act ?" 3. I have heard learned Departmental Representative at length and counsel for assessee. They addressed to me elaborate arguments. Departmental Representative contended that under scheme of Act even though every expenditure necessary for purpose of business could be allowed as deduction in computing business income, yet limitations were placed by Act under different sections and allowance of expenditure must be subject to those limitations. Sec. 80VV was one of section which placed limit on deduction in respect of expenses incurred in connection with proceedings under Act. If any expenditure is incurred in respect of any proceeding before any IT authority or Tribunal or any Court relating to determination of any liability under Act by way of tax, penalty or interest, that amount would be allowed as deduction subject to limit of Rs. 5,000. For s. 80VV to apply expenditure incurred must be in relation to proceeding before any IT authority or Tribunal or any Court and again that must be in relation to determination of liability under Act, namely, tax, penalty or interest. Only then limitation placed under this section would apply. It is also conceivable that expenditure could be incurred in respect of obtaining opinion in regard to several other matters not necessarily relating to determination of any liability under Act. Such expenditure would be considered for allowance under s. 37. But even so there is limitation placed i.e., that expenditure should not be in nature of personal expenditure or capital expenditure. It is not in this case clear for what purpose amount was paid to S. P. Mehta & Co. If amount was paid for purpose of income-tax proceedings, then purpose for which money was paid must have been made known, otherwise it should be regarded as personal expenditure and since personal expenditure was not to be allowed under s. 37. For this proposition reliance was placed on decision of Bombay High Court in Kishinchand Chellaram vs. CIT 1977 CTR (Bom) 694 : (1978) 1 14 ITR 654 (Bom). Another argument addressed by learned Departmental Representative was that consultation that must have been Departmental Representative was that consultation that must have been taken from S. P. Mehta & Co. must be in ultimate analysis to be said to reduce income-tax liability. Income-tax liability being one payable on profits is not deductible expenditure. It is to be characterised as personal expenditure and for that reason not expenditure incurred in earning profits. third argument that was advanced by him was that Chapter VIA dealt with deductions to be made in computing total income, which excludes income from business and its computation. deductions to be allowed under this Chapter are over and above deductions allowable under s. 28 to 43 of Act. Since this expenditure was not to be allowed under s. 80VV it cannot also be allowed under s. 28. 4 . But learned advocate for assessee submitted that any professional fee paid for purpose of business is allowable under s. 37 as there was nothing to show that this expenditure was personal expenditure, all arguments raised by Departmental Representative based on this premises must fall to ground. Sec. 80VV does not apply to these payments and as consequence amount paid to S. P. Mehta & Co. should be allowed as deduction under s. 37 because decision given by Supreme Court in Birla Cotton Spg. & Wvg. Mills Ltd. s case (supra) is still authority for proposition for allowance of expenditure under s. 37 provided it was for purpose of business and not personal expenditure. He then referred to decision of Special Bench of Tribunal in case of ITO vs. Smt. Vijayalaxmi N. Mafatlal (1985) 12 ITD 12 (Bom) in which case Special Bench held that expenditure incurred by assessee in connection with gift-tax and wealth-tax proceedings before High Court and Supreme Court could be allowed as deduction under s. 37(1). He also placed reliance upon decision of Jaipur Bench in case of Man Industrial Corpn. Ltd. vs. ITO (IT Appeal Nos. 658 to 660 (Jp) of 1983). 5 . I have carefully considered arguments addressed to me and records. I am of opinion that view taken by learned Accountant Member is preferable to view expressed by learned Judicial Member. I might straightaway say that since claim put up before ITO was to allow Rs. 6,250 in all and since Rs. 5,000 was allowed by learned Judicial Member, which was much more than Rs. 3,950 paid to S. P. Mehta & Co., which item alone was contested by Department in grounds of appeal and since learned Accountant Member also has said nothing about this allowance of Rs. 5,000, in way it could be said that insofar as this item is concerned, from point of view of figures, there was no difference of opinion. But in different of opinion framed by learned Members, this point was specifically mentioned, I have to, therefore, give my opinion thereon. Sec. 80VV, it is common ground, does apply only to expenditure incurred in relation to any proceedings before any IT authority or Tribunal or any Court relating to determination of any liability under Act by way of tax, penalty or interest. For that section to apply basic ingredients to prove are that expenditure was in connection with proceedings before any IT authority or Tribunal or any Court and secondly, it must be in relation to determination of any liability under Act and thirdly, that liability should be in regard to tax, penalty or interest. It is common ground between my learned brothers that amount paid to S. P. Mehta & Co. for consultation was not in connection with any proceedings before any IT authority or Tribunal or any Court much less for determination of any liability under Act by way of tax, penalty or interest. Thus, application of s. 80VV is ruled out. learned Departmental Representative also is very fair in admitting before me that if fee paid to S. P. Mehta & Co. was not for appearing before any IT authority or Tribunal or any Court s. 80VV would have no application. It is also admitted fact that S. P. Mehta & Co. did not appear before any IT authority for determination of any tax liability. application of s. 80VV is, therefore, ruled out. Now what is to be seen is whether this expenditure could be allowed under s. 37. For s. 37 to apply expenditure must be in connection with business and should not be of personal nature. Factually there is nothing on record to show that this expenditure was of personal nature and not for purpose of business. It is only inference drawn by learned Departmental Representative but that is not fact found either by ITO or by CIT or at any stage even breathed. Therefore, point becomes crystal clear that that expenditure was not personal expenditure. When expenditure was not for personal purposes and when s. 80VV does not apply, that amount be held to be business expenditure under s. 37. arguments raised by learned Departmental Representative do not touch issue in light in which I have expressed myself above. If s. 80VV does not apply there is no question of putting limitation on allowance of expenditure as was sought to be done by learned Judicial Member. When expenditure is not of personal nature, question of applying ratio of Bombay High Court in Kishinchand Chellaram s case (supra) does not come into picture at all. Then argument based upon computation of income to be made and further deductions to be given under Chapter VIA also does not survive for consideration for simple reason that if this expenditure fell for deduction under s. 37, then no further consideration survives. Chapter VIA makes provision for certain deductions over and above what was provided for in ss. 28 to 43, as well as places certain limitations. Now this expenditure having fallen for consideration under s. 37, it stops there and we need not look into any other provision in Chapter VIA. Some arguments were addressed to me on basis that s. 40(a) (ii) will apply. Departmental Representative s contention is that s. 40(a) (ii) places prohibition on allowance of any expenditure which is to be computed with reference to profits and gains of business either by way of rate or otherwise. I do not wish to quote that section in extenso here all because what was paid by way of consultation fee to S. P. Mehta & Co. was not sum paid on account of any rate or levy on profits and gains of business much less can it be said to have been assessed at proportion of or otherwise on basis of any profits and gains. Sec. 40(a) (ii) does not, therefore, apply at all. On other hand, I find that Special Bench of Tribunal constituted at Bombay in case of Smt. Vijayalaxmi N. Mafatlal (supra) held that legal expenses incurred in connection with gift-tax and wealth- tax proceedings were deductible in computing income of assessee on principle that that expenditure was necessary to preserve intact business assets of assessee. Special Bench there pointed out that where expenditure is entirely relatable to business, it is allowable and where person has dual capacity of trader-cum-owner and incurs expenditure in connection with property used for purpose of trade, payment must be taken to be in capacity of trader according to ordinary commercial principle. That test would apply with equal force in this case. Another noteworthy observation made by Special Bench was that by incurring such expenditure assessee could successfully resist and protect assets like shares from arbitrary valuations and assessments made by Department both under gift-tax and wealth-tax enactments and expenditure incurred to get rid off such arbitrary assessment is expenditure incurred for purpose of business. Jaipur Bench to which reference was made by learned advocate for assessee also supports view that expenditure incurred by way of consultation fee, which does not fall under s. 80VV, could be allowed as deduction under provisions of s. 37 provided expenditure was not of personal nature. Since there was no finding here that expenditure w s personal nature and it appeared to be common ground between Members that expenditure was for purpose of business and since learned Judicial Member thought that s. 80VV being special provision that should prevail over s. 37, I am of opinion that if expenditure does not fall under s. 80VV, that expenditure should be considered for allowance under s. 37 and under that section there is no prohibition for allowance of this expenditure. I, therefore, agree with view of learned Accountant Member and hold that this expenditure for general consultation is allowable as business expenditure under s. 37 and is not attracted by s. 40(a) (ii). In this view of matter, I am of view that first part of question stands answered in sense that expenditure in question does not fall within meaning of s. 80VV. 6. Now matter will go before original Bench which heard appeal for disposal according to majority view. *** INCOME TAX OFFICER v. MANNALAL NIRMAL KUMAR