Income Tax - Top Lawyer Shanti Bhushan claims his heart is akin to a plant - High Court Not Impressed - What is cost of acquiring heart?
HERE is a very interesting case decided by the Delhi High Court yesterday.
At the heart of the matter, as a matter of fact, is the heart itself. The High Court says, “When one speaks of heart it brings forth imagery of myriad emotions. Emotions which encompass, often varied passions, of soulful love, abominable deceit, unremitting treachery and revenge. No two individuals deal with matters of heart similarly; often confounded, as to how to deal with it”
“The issue raised is both ingenious and novel. The question raised is the product of experience, deftness and obvious artfulness of the petitioner (Shanti Bhushan) who is a seasoned, experienced and an eminent Advocate of the country”.
During the Course of the assessment of Shanti Bhushan's Income Tax return for 1983-84, the Revenue found that he had claimed as expense a sum of Rs. 1,74,000/- incurred evidently by him, on coronary surgery performed on him, in Houston, USA. He claimed waiver under Section 31 of the I.T. Act which, inter-alia permits deduction of expenditure incurred on current repairs of plant.
The assessee's stand was that the expenditure incurred by him on coronary surgery conducted on him, was akin to expenses incurred on current repairs of a plant. The assessee's stand thus is that a human heart is in the nature of a plant.
The Assessing Officer, however, was of the view that the expenditure in issue, was in the nature of a personal expense and hence, not allowable as deduction either under Section 31, or even, under Section 37 of the I.T. Act [we will deal with Section 37, a little later].
Having failed with the AO, the Appellate Commissioner and the Tribunal, the really learned assessee, Shanti Bhushan is before the High Court.
He submitted that Coronary surgery was not a life saving operation but was undertaken due to professional and commercial expediency in order to enable assessee to carry out his profession efficiently. It was stressed that the medical procedure had enabled the assessee to travel extensively all over the country in connection with his professional duty of putting in appearances in various High Courts of the country. He also submitted that after the surgery, his income had increased from 3.55 Lakhs in 1982 to 106 Lakhs in 1992.
The High Court was of the opinion that deduction under section 31 of the IT Act would not be available for two reasons:
++ Cost of Acquiring heart? If the heart of a human being, as in the case of the assessee, were to be considered a plant, it would necessarily mean that it is an asset which should have found a mention in the assessee's balance sheet of the previous year in issue, as also, in the earlier years. Apart from the fact that this is admittedly not so, the difficulty that the assessee would face in showing the same in his books of accounts would be of arriving at the cost of acquisition of such an asset.
++ Heart is not a professional tool: Even if one were to give the widest meaning to the word “plant? in section 31 of the IT Act, it would still not fall within the definition of the word plant . It cannot be said that the assessee who is a lawyer would have used his heart as a tool for his professional activity. The fact that a healthy and a functional human heart is necessary for a human being irrespective of his vocation or social strata is stating the obvious. But this would not necessarily lead to the conclusion that the heart is used by, a human being, as a tool of his trade or professional activity. General well being of the heart and its functionality cannot be equated with using the heart as a tool for engaging in trade or professional activity. At least the facts in this case do not demonstrate the same.
Hence, the petitioner's claim for allowing deduction of the expenses incurred by him on his coronary surgery under section 31 of the IT Act, is rejected.
Now the alternate plea of claim under Section 37: The High Court held that the claim for deduction under section 37 of the IT Act should satisfy three conditions:
++ It should be an expense which is incurred wholly and exclusively for the purpose of the assessee's business or profession;
++ It should not be an expense incurred to bring into existence a capital asset; and
++ It should not be an expense of a personal nature.
The High Court held that the assessee's claim under section 37 of the IT Act does not fulfil the first condition which is that the expense in issue have been incurred wholly and exclusively for the purposes of the assessee's profession. An impaired heart would handicap functionality of a human being irrespective of his position, status or vocation in life. Expenses incurred to repair an impaired heart would thus add perhaps to the longevity and efficiency of a human being per se . The improvement in the efficiency of the human being would be in every activity undertaken by a person. There is thus no direct or immediate nexus between the expenses incurred by the assessee on the coronary surgery and his efficiency in the professional field per se . Therefore, to claim a deduction on account of expenses incurred by the assessee on his coronary surgery under section 37(1) of the IT Act would have to be rejected.
But Shanti Bhushan is not one to lose heart. It seems he has decided to appeal to the Supreme Court. Shanti Bhushan's income is around 10 -15 Crores now and the amount disallowed by the High Court is paltry, but the 80 plus lawyer will not leave this case so close to his heart.
On the cost of acquiring the heart, Business Standard reported that he said, “it is not a ‘purchased asset' but a ‘God-given gift.' If the asset is given free, the cost of repairs should be allowed to be deducted.”
We will bring you the full text of the case on Saturday.