1991 (7) TMI 120 - AT - Income Tax

Summary

Issues:
1. Assessment of household expenses.
2. Disallowance of expenses claimed by the assessee.
3. Rejection of deduction under section 80U of the Income Tax Act.

Analysis:

Assessment of Household Expenses:
The assessee, a medical practitioner, disclosed household expenses of Rs. 5,606, attributing part of it to his wife's income. The ITO estimated household expenses at Rs. 18,000 in the previous year and added Rs. 5,000 to the declared amount. The AAC upheld this addition. The Tribunal found the ITO's estimate reasonable and justified, confirming the addition of Rs. 5,000.

Disallowed Expenses Claimed by the Assessee:
The assessee claimed deductions for various expenses, including car and repair expenses. The ITO disallowed Rs. 3,000 out of the total claimed expenses of Rs. 42,500. Additionally, Rs. 2,933 was disallowed for motor car and repair expenses. The assessee appealed, arguing that the disallowance should be reduced to 1/5th instead of 1/3rd based on the previous year's decision. The Tribunal accepted the assessee's submission and directed the ITO to restrict the disallowance to 1/5th of the expenses.

Rejection of Deduction under Section 80U:
The assessee claimed a deduction under section 80U due to a permanent physical disability resulting from a hip replacement surgery. The ITO rejected the claim, stating that the disability did not affect the earning capacity as the assessee's income was increasing annually. The AAC upheld this decision. The Tribunal, citing the provisions of section 80U and relevant case law, found that the disability substantially reduced the capacity to engage in gainful employment. The Tribunal directed the ITO to allow the deduction of Rs. 10,000 under section 80U.

In conclusion, the Tribunal partly allowed the appeal, confirming the addition to household expenses, adjusting the disallowed expenses, and directing the allowance of the deduction under section 80U.