Shanti Bhushan vs. CIT (Delhi High Court)

Professional’s heart surgery expense not deductible u/s 31 or 37(1)

The assessee, a lawyer, claimed that his professional work had led to a heart attack and that the expenditure incurred by him on a heart operation was deductible u/s 31 on the ground that the heart was “plant” and the expenditure was incurred on “current repairs”. It was also claimed that as his professional receipts increased substantially after the operation, the expenditure was “wholly & exclusively” for profession and deductible u/s 37(1). The AO, CIT(A) & Tribunal rejected the assessee’s claim. On appeal to the High Court, HELD dismissing the appeal:

(i) The claim for deduction u/s 31 is not acceptable because (a) 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;

(ii) The claim u/s 37(1) is also 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.