Eye treatment expenditure ‘personal’, deduction under section 37(1) not allowed: Bombay High Court [Read Judgment]

Bombay High Court held that deduction under section 37(1) of Income Tax Act cannot be allowed for expenditure on medical treatment of eyes for improving the vision as it has an element of personal expenditure. Upholding the Income Tax Appellate Tribunal  order of dismissal of claim, a division bench of Justices M.S.Sanklecha and G.S.Kulkarni  held that the expenditure incurred by the appellant on foreign tour for pre-operation investigation relating to his eyes cannot be allowed as business expenditure u/s 37 (1) of I-T Act.

Facts

The appellant, Solicitor by profession, incurred an expenditure of Rs.43,600/- on a foreign tour in connection with a pre-operation investigation of his eyes while determining his total income. This claim was disallowed by the Assessing Officeron the ground it was personal expenditure. Therefore, it did not arise in the course of the profession nor was it incidental to the profession. Appellate tribunal also upheld the order of Assessing officer and the appellant approached the High Court.

Section 37(1) of Income Tax Act

Any expenditure not being expenditure of the nature described in sections 30 to 36  and not being in the nature of capital expenditure  or personal expenses of the assessee, laid out or expended wholly and exclusively  for the purposes of the business  or profession shall be allowed in computing the income chargeable under the head “Profits and gains of business or profession”

The Court observed that requirement to claim a deduction under Section 37(1) are

• The expenditure must not be of the nature described insection 30 to 36;
• The expenditure must not be capital in nature
• The expenditure must have been laid down wholly and exclusively for the purpose of business/profession of the assesse
• The expenditure must not be personal in nature.

Eye treatment is a personal expenditure

The Court found that no evidence has been brought on record to establish that in the absence of investigation and treatment, the applicant would be handicapped in discharging his obligation as a Solicitor/ Advocate.  The court also remarked “While at this, we cannot resist but point out that in this Court itself, we have a couple of visually challenged Advocates who are very competent in discharging their duties. We may also make reference to the late Mr.Sadhan Gupta who passed away recently and though visually challenged was as such appointed as Additional Advocate General of West Bengal in 487.498.02-ganate .doc 1978 and the Advocate General in 1986.”

The Court also observed that if the submission of the applicant is taken to its logical conclusion, then every and all expense incurred on daily living and food would be allowable as expenditure under Section 37 of the Act. We find no substance in the contention that it is not a personal expenditure incurred by the Appellant, the Court held.

Eyes are not exclusively used for profession.

The court added “We are not persuaded to accept the submission on behalf of the applicant that eyes are required to beexclusively used for the purpose of profession by the applicant. As observed above eyes are an important organ of the human body and is essential for the efficient survival of a human being. Eyes are thus essential not only for the purpose of business or profession but for purposes other than these which are so many. It is therefore clear that the said expenditure as claimed by the applicant is not in the nature of the expenditure wholly and exclusively incurred for the purposes of the profession of the applicant and thus this expenditure cannot be claimed by the applicant to be allowed as deduction in computing the income chargeable under the head profits and gains from business or profession in case of the applicant as per the provisions of Section 37 of the Act.

Read the Judgment here.