Shanti Bhushan to seek I-T deduction from SC for heart surgery

Eminent lawyer Shanti Bhushan will move the Supreme Court (SC) seeking income tax deduction for expenses incurred on heart surgery. This is after the Delhi High Court (HC) today dismissed his pleas on the matter.

Bhushan, the former Union Minister and member of Lokpal Bill drafting committee, had claimed that his professional work had led to a heart attack and that the expenditure incurred by him on a heart operation was deductible under section 31 of the Income Tax (I-T) Act.

Talking to Business Standard Bhushan said, "Monetarily the impact of the HC order would be negligible. I file return for some Rs 10 - Rs 15 crore annually and minor surgery costs would not affect me. But I would take the matter to SC for my principle."

Bhushan's reasoning was based on the grounds that heart was “plant” and the expenditure was incurred on “current repairs”. He also claimed that his professional receipts increased substantially after the operation, the expenditure was “wholly & exclusively” for profession and deductible under section ( u/s) 37(1) of the I-T Act.

Dismissing his plea the HC noted that "if the heart 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. This was not done and cannot be done as the “cost of acquisition” of such an asset cannot be determined and (b) Even if the widest meaning to the word “plant” is given the heart does not satisfy the “functionality” test because while the heart is necessary for survival, it does not mean it is used as a “tool” of trade or professional activity,"

The HC further observed that the claim u/s 37(1) was not acceptable because the expenditure is not incurred wholly and exclusively for the purposes of the assessee’s profession. There is 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.

Although, Bhushan is of the view that HC's review of the matter and the judgement is quite comprehensive, he says the court has committed a error.

"It is a comprehensive but controversial judgement. If the court says that heart should have been mentioned in previous years accounts as an asset, I would say that it is not a 'purchased asset' but 'God given gift.' If the asset is given free, then cost of repairs incurred on it should be allowed to be deducted," Bhushan claimed.