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R. Anand

R. Anand says that deduction for the physically challenged rests on too many crutches

ONE of the several deductions available from the gross total income of an individual in Chapter VIA of the Income-Tax Act, 1961 is the Rs 40,000 under Section 80U. This is available for resident individuals suffering from permanent physical disability, including blindness and mental retardation. The section has been in the statute book since 1968 and has undergone several changes to accommodate different types of permanent physical disability. The quantum of deduction, which started at Rs 2,000, has been upgraded to Rs 40,000 over the years.

Like any concessional provision, Section 80U bristles with several conditions and safeguards, leaving many an assessee distraught at claiming the deduction itself. Apparently, there have been misuses and, therefore, the lawmakers have tightened the rules, though only in bits and pieces. Recently, the Gujarat High Court, in Commissioner of Income-Tax vs Narendra R. Oza (2002 257 ITR 466), had to consider Section 80U deduction and decided in favour of the assessee.

Facts, conditions

This was a case about an assessee having substantial income. He claimed deduction under Section 80U, as he was deaf and, even with the help of a hearing aid, could not hear from a distance of 2-3 feet. The lower authorities interpreted the deduction to mean that once an individual has substantial income, he was not entitled to deduction. The Gujarat High Court held that the assessee was entitled under the law to the relief notwithstanding the fact that he had substantial income.

In coming to the conclusion, the court relied heavily on its own decision in CIT vs Bhagwti Prasad P. Parikh (1999 239 ITR 645). One of issues that arises out of this decision is: Under what circumstances can an assessee make a claim under Section 80U?

As per the conditions set forth in the section: i) it is available to a resident individual who suffers from permanent physical disability; ii) it is also available to an individual suffering from mental retardation specified in the rules; iii) the disability should have the effect of reducing considerably such individual's capacity for normal work or engaging in a gainful employment or occupation; iv) the deduction is available only if it is certified by a physician/surgeon/oculist or a psychiatrist working in a government hospital; and v) the certificate has to be produced before the assessing officer (AO) with whom the deduction is claimed.

Further, the rules, as specified in Section 11D, prescribes the extent of blindness, mental retardation, permanent deafness and of other types of permanent physical disability. The conditions laid down specify in mathematical terms how and when an assessee can claim deduction under Section 80U. Despite this, there has been much controversy on whether an assessee can claim deduction when he has reasonable or substantial income.

The object of Section 80U is to provide relief to assessee, which cannot be withheld on the ground that a person who seeks the relief has substantial income (V. M. Nithayanam vs CIT — 1999 239 ITR 328 Madras; CIT vs K. Santhanakrishnan — 2000 241 ITR 582 Madras). It was also held in another interesting case that where an assessee suffers from permanent physical disability, the benefit of deduction cannot be denied to him on the ground that his income has increased over the previous year (J. K. Abdul Jabbar vs CIT — 1998 237 ITR 389 Madras). There was also an interesting dispute as to whether an assessee can claim Section 80U deduction when suffering from hypertension. This ailment is not covered in the list of situations specified under Section 80U and, therefore, the assessee was not entitled to the deduction (CIT vs E.V. Subramanian — 2000 243 ITR 281 Madras).

Issues

It is a matter of concern that a nation which prides on the strength of its people has to fight litigation on issues such as permanent physical disability. The deduction given on physical disability and health grounds have to be granted with open hands and gracefully. Too many conditions defeats the very purpose of granting such a deduction.

There is a tendency to draft laws keeping in mind a few obvious offenders but, in the process, the larger percentage of law-abiding people suffers the most.

In an era of paperless offices and electronic communication, filing of certificates/papers to substantiate claims of permanent physical disability has to be done away with.

Time has come to have a simpler system of granting and allowing Section 80U deduction, keeping in mind that most of the returns are now being accepted as such.

Cases of false claims can always be tackled through a rigorous process of investigation. It should be made clear that the existence of income, whatever be its nature and extent, should not deny an assessee Section 80U deduction as long as he suffers from permanent physical disability.

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