DHIMANT THAKKAR Vs. FIFTH INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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K.C. Singhal, Judicial Member -
(1.) THE first ground of appeal relates to disallowance of a sum of Rs. 43,600 incurred by the assessee on a foreign tour in connection with pre-operation investigation of the eyes.
(2.) The assessee is a solicitor by profession. During the year under consideration he incurred expenditure of Rs. 43,600 on foreign tour in connection with pre-operation investigation of his eyes. The claim was disallowed by the Assessing Officer on the ground that it was personal expenditure and the same did neither arise out of the profession nor it was incidental to the profession. The action of the ITO was upheld by the CIT(A).
The learned counsel for the assessee has vehemently argued that the expenditure had a nexus with the activity of his profession, as eyes are necessary for carrying on the profession of the assessee and therefore, such expenditure cannot be called personal expenditure. The case laws referred to by the CIT(A) were distinguishable according to the learned counsel for the assessee. He pointed out that food is a matter for a human being to keep alive but eyes are not. Certain illustrations were quoted by him for this purpose, i.e., gash on the face of film artist will be detrimental to his profession and therefore, the medical expenditure on plastic surgery has a nexus with the carrying on of his profession. Similarly the gown has a nexus with the carrying on the profession of a lawyer. In the course of his argument he stated that a black coat may not have a nexus as it can be worn at any time but a gown has a nexus. The bone of his contention was that we should ascertain the purpose of the expenditure which is important and a definite line has to be made where personal expenditure and business expenditure can be ascertained. He also distinguished the order of the Tribunal in the case of Shanti Bushan v. ITO  41 ITD 562 (Delhi) on the ground that in that case the operation of the heart was necessity to live and therefore, it was held as a personal expenditure. But in the present case, eyes are a necessity to carry on the profession.
(ii) On the other hand, the learned Senior Departmental Representative argued that eyes are not only used for profession but are necessary for personal use also. According to him one can function without them. The support was taken by him from the provisions of Section 80V where rebate has been allowed from the income of the totally blind person. He therefore said that tongue may be relevant for a lawyer but not the eyes. He also argued that even otherwise the expenditure incurred by the assessee cannot be said to be laid out or expended wholly and exclusively for the purpose of profession. According to him if the expenditure can be attributed to both the purposes i.e., professional as well as personal it cannot be allowed as business expenditure because in such cases it cannot be said to have been incurred wholly and exclusively for the purpose of profession.
(3.) BOTH the parties have been heard at length. The answer to the issue raised in this appeal would depend upon the fulfilling of the following conditions laid down in Section 37(1) of the Income-tax Act, 1961:-
(1) The expenditure must not be personal or capital expenditure.
(2) It must be laid out or expended wholly and exclusively for the purpose of business or profession.
(3) It must not be of the nature described in Sections 30 to 36.
Admittedly, the expenditure in question is not of the nature described in Sections 32 to 36. Hence, first question arise is, whether the expenditure is personal or capital in nature. The word personal has not been defined in the Act but in the common parlance it means pertaining or belonging to the body or appearance of human being. It may also mean effecting or relating to one individually. Though much judicial opinion is not available relating to the meaning of 'personal' yet one judgment of the Hon'ble Supreme Court is available which is reported in State of Madras v. G.J. Coelho  53 ITR 186 in which some observations have been made by their Lordships to the meaning of 'personal'. The following observations were made by their Lordships :-
'Personal expenses' included only expenses on the person of the assessee or to satisfy his personal needs such as clothes, food, etc., or for the purposes not related to the business.
Eyes, in our opinion, is an important organ of every human being for an effective living. In the case of any defect in the eyes the medical treatment thereof is very much necessary for effective living of an human being, irrespective of the business, profession or vocation carried on by him. Therefore, the expenditure on medical treatment of eyes is certainly personal expenditure of every human being. The contention of the assessee's counsel that Supreme Court's observations are distinguishable as that case relates to disallowance of interest on borrowings cannot be accepted. In that case, the contention was raised on behalf of the State that expenses were personal expenses of the assessee. It is in this context that the Supreme Court made these observations. Hence these observations are very much relevant for deciding the issue.
(ii) The learned counsel for the assessee also tried to distinguish the Tribunal decision in the well known case of Shanti Bushan (supra). It was stated by him that, in that case the operation of heart was necessary for Living includes effective living of human being. Eyes are not only necessary to carry on the activities of earning but are also necessary for day to day working by a human being. Even to live a sedentary life one wish to have healthy eyes. Therefore, it cannot be said that expenditure in connection with medical treatment of eyes is not personal expenditure.
(iii) On the other hand, the contention of the revenue that expenditure was not laid out or expended wholly or exclusively for the purpose of profession is well founded. Stress was laid down upon the wording "wholly and exclusively". According to the Senior departmental representative, the expenditure must be 100% for the purpose of profession and if the expenditure can be attributed to profession as well as personal, the same cannot be allowed. The words "wholly and exclusively" although have not been defined in the Act, yet these words in our opinion mean totally, completely, solely and to the exclusion of the other things. So the sole purpose should be for the purpose of business or profession. The argument of the learned counsel for the assessee that vision of the eyes has great nexus to the activity of the profession carried on by the assessee cannot lead to the conclusion that the sole purpose of medical treatment of eyes was for the purpose of business. The medical expenditure for improving vision of the eye of the lawyer may have some nexus to the professional activity but that by itself cannot tantamount to incurring of expenditure wholly and exclusively for the purpose of profession carried on by him. If the expenditure can be attributed to both the purposes i.e., professional as well as personal, then it cannot be allowed under Section 37. The test to be applied is whether the expenses have been incurred with the sole object of furthering the interest of the business or profession of the assessee unmixed with any other consideration. If the expense is found to be an element other then the business or profession, than such expenditure cannot be allowed as not being laid out wholly and exclusively for the purpose of profession. Since we have already held that expenditure on medical treatment of eyes for improving the vision has an element of personal expenditure, the expenditure incurred by the assessee on foreign tour for pre-operating investigation relating to his eyes cannot be allowed as business expenditure under Section 37(1). Hence this ground of the assessee is dismissed.;
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