The heart of I-T matters

T.C.A.RAMANUJAM | Updated on: Jul 05, 2011


The human heart should figure as an asset in the balance-sheet with a cost of acquisition, for expenses on it to be eligible for deduction.

The charm of the legal profession lies in the ability to twist and interpret the law to suit particular situations. The ingenuity of the lawyer knows no bounds. Let's take the instance of what an eminent advocate argued before the Delhi High Court.

Shanti Bhushan Vs. CIT: Mr. Shanti Bhushan is an eminent Constitutional lawyer. For the assessment year 1983-84, Mr. Bhushan declared a professional income of Rs.2,14,050/-. In arriving at this figure, he had claimed as deduction a sum of Rs1,74,000 incurred by him as expenditure on coronary surgery performed on him in Houston in US. Shockingly, he justified the claim as an admissible deduction falling under Section 31 of the Income Tax Act, 1961, which allows expenditure incurred on current repairs of plant.


Mr Bhushan's stand was that the expenditure on the human heart was akin to expenses incurred on current repairs of a plant. He had suffered a heart attack in December 1978 and was advised to avoid strenuous physical activity. The remedy was a bypass surgery. The repair of the vital organ, the heart, had directly impacted his professional competence. The heart surgery had resulted in a rapid increase in his professional income in the subsequent years.

His income went up from Rs 3.5 lakh during the year of surgery to Rs.106 lakh five years later. He argued that the term ‘plant' should be interpreted as an inclusive word. For a professional musician, plant would include musical instruments used by him.

Expenses incurred by a vocalist on repair of his vocal cords, and by a cricketer and a guitarist making use of their fingers, would fall under current repair. A plethora of case law was cited in support of this argument. The assessing officer rejected the claim. He pointed out that for the claim to succeed, it should be possible to relate it to an asset of the profession. Such an asset would have to be disclosed in the books of accounts. The plant as an asset would have to be exhibited on the asset side of the balance sheet. It would have to carry an acquisition cost. The claim was completely rejected. The first and second appellate authorities confirmed the assessment order. Undaunted, Mr. Bhushan took up the matter in appeal before the Delhi High Court.

The Delhi High Court took pains to examine the matter at length. It pointed out that if the heart of a human being were to be considered a plant, it would mean that it is an asset finding mention in the assessee's balance-sheet of the previous year in issue and also in the earlier years. There would also be a difficulty in arriving at the cost of acquisition of such an asset. A healthy and functional human heart is necessary for any human being, irrespective of his vocation. But this will not convert the heart into a tool of professional activity.

General well-being of the heart and its functionality cannot be equated with using the heart as a tool for engaging in the profession. The claim under Section 31 was, therefore, to be rejected.


The alternate claim for deduction under Section 37 also fails, because the expenditure was not incurred wholly and exclusively for the purposes of the profession. Such expenditure may perhaps add to the longevity and efficiency of a human being per se. The claim was rejected on the alternate ground as well.

The High Court made interesting analogies in the context of Section 37. According to the High Court, a film star undertaking plastic surgery to prevent age being reflected on screen may probably claim the expenditure under Section 37. Plastic surgery will prevent age being reflected on screen.

Does the High Court mean that professional film stars can have an extended beneficial interpretation of Section 37? Expenses incurred for keeping the waist slim and even routine beautician expenses may probably be allowed under Section 37. These observations of the Court may probably fall in the category of obiter dicta.

There is also the novel interpretation of the term ‘plant' under Section 31. It should figure as an asset in the balance sheet from year to year and there should be cost of acquisition. These findings are in the context of the claim that for the lawyer, the heart should be treated as plant. Since it did not figure in the balance sheet with a cost, the Court concluded that Section 31 will not apply. Does that mean that the lawyer has no heart?

(The author is a former Chief Commissioner of Income Tax.)

Published on July 02, 2011
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