AMIT BAJAJ ADVOCATE

In an interesting case namely Shanti Bhushan V CIT, Delhi High Court has held that a professional cannot be allowed deduction of the expenses incurred for his heart surgery u/s 31or 37(1) of Income Tax Act 1961. Interestingly the appellant (a lawyer) claimed that heart is a plant and expenses incurred on its surgery should be considered as expenses on current repairs.But High court rejected the claim of the appellant.

Brief facts: 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:

Mumbai Tribunal has held in an important case namely  The Tata Power Co. Ltd. Vs Addl. CIT that deduction u/s 54EC from long term capital gains will be allowed before set off of brought forward Capital losses.

Crux of the order: "The stage at which set off of carried forward long term capital loss is to be given is subsequent to the stage at which income under the head capital gains is computed and deduction u/s 54EC is to be given in the course of the latter. Accordingly, s. 54EC deduction has to be given before set-off of losses."