K. Shivashankar Bhat, J.—A short but interesting question arises in this reference. The question referred to us under the provisions of the Income Tax act, 1961, reads as follows :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that legal expenses claimed by the assessee fall under section 80VV of the Act and not under section 37 of the Act ?"

2. The assessee claimed a sum of Rs. 1,300 as an expenditure under section 37 of the Act. This sum of Rs. 1,300 was paid to two legal practitioners a sum of Rs. 1,000 to tax counsel as a retainer fee and another sum of Rs. 300 to another person to represent the assessee before the Registrar of Companies in connection with the business of the assessee. The statement of the case is not very clear that this sum of Rs. 300 was allowed, but it states that out of the total legal expenses of Rs. 1,300, Rs. 800 was appropriated towards the estimated expenditure as falling under section 80VV of the Act. The said section reads thus :

"In computing the total income of an assessee, there shall be allowed by way of deduction any expenditure incurred by him in the previous year in respect of any proceed