1. This appeal by the assessee is directed against the order of the AAC dated 1-2-1982, relating to the assessment year 1980-81. The issue involved in this appeal is whether, on the facts and in the circumstances of the case, the assessee is entitled to deduction under Section 80U(ii) of the Income-tax Act, 1961 ("the Act").
2. The assessee is an individual and has income from shares from the firm, Parkash Soap Factory, interest from bank and business as well as house rent as stated by the ITO in his impugned order, dated 30-6-1981.
For this assessment year, the assessee filed the original return on 29-9-1980 declaring a total income of Rs. 20,470. This return was revised subsequently and, in this revised return, the assessee, inter alia, claimed relief under Section 80U(ii) of the Act. The assessee also filed a certificate from a medical practitioner as proof of permanent physical disability. The ITO examined this claim but came to the conclusion that "the assessee's case is not covered under this section for the simple reason that disease, not a permanent physical disability from which the assessee is suffering, had not the effect of reducing substantially his capacity to engage in a gainful employment or occupation". After making the above observation, the ITO gave the figures of income assessed for the three assessment years immediately preceding the assessment year under appeal to prove the point. The assessee went up in appeal.
3. The AAC considered the submissions of the assessee but, taking into consideration Circular No. 246 [F. No. 178/3/1977-IT(A-II)], dated 20-9-1978 issued by the CBDT enumerating certain types of disabilities to which the section could apply, came to the conclusion that "pulmonary tuberculosis with bronchial asthma is not covered under this circular". He, therefore, held that the assessee was not suffering from any permanent physical disability and, as such, not entitled to relief under Section 80U(#). Hence, the present appeal.
4. The parties have been heard. It is not in dispute that the assessee is suffering from pulmonary tuberculosis with bronchial asthma for the last 20 years. The assessee had also filed a certificate from a registered medical practitioner, Dr. V.K. Gupta, M.B.B.S., Ex. HCNS, Ambala Cantt. This certificate, given by the doctor, certified that Shri Om Parkash s/o late L. Makhan Lal, partner of Parkash Soap Factory, Ambala Cantt., is suffering from pulmonary tuberculosis with bronchial asthma and was under his treatment for the last two years.
The doctor has further certified that the disease being of permanent physical disability, had substantially reduced Shri Om Parkash's capacity to engage in a gainful occupation. As stated earlier this certificate is dated 31-3-1981. On these facts, the claim of the assessee is to be considered for relief under Section 80U(ii).
5. Section 80U(a) came on the statute book by an insertion by the Finance Act, 1968, with effect from 1-4-1969. This section was substituted by the Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971. It deals with deductions in the case of totally blind or physically handicapped resident persons. This section is a part of Chapter VI-A of the Act, dealing with the deductions to be made in computing the total income. The deductions given in this Chapter have been categorised as A, B, C and D and under each category there is a fasciculus of sections dealing with diverse deductions. Deductions under D category are called 'other deductions' and Section 80U comes under it. Prior to its substitution with effect from 1-4-1971, by the Taxation Laws (Amendment) Act, 1970, the deduction allowed was of a sum of Rs. 2,000 only in the case of blind persons, but the substituted section with effect from 1-4-1971 also allowed deduction of a sum Rs. 5,000 to an individual who was subject to, or suffering from, a permanent physical disability other than blindness which had the effect of reducing substantially his capacity to engage in a gainful employment or occupation. This section contains certain requirements to be fulfilled before the deduction could be claimed. In order to appreciate the import of the section, it is incorporated in the body of the order which for the relevant assessment year stood as under : 80U. Deduction in the case of totally blind or physically handicapped resident persons.-In computing the total income of an individual, being a resident, who, as at the end of the previous year- (ii) is subject to or suffers from a permanent physical disability (other than blindness) which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation, there shall be allowed a deduction of a sum of five thousand rupees : Provided that such individual produces before the Income-tax Officer, in respect of the first assessment year for which deduction is claimed under this section- (i) in a case referred to in Clause (i), a certificate as to his total blindness from a registered medical practitioner being an oculist ; and (ii) in a case referred to in Clause (ii), a certificate as to the permanent physical disability referred to in the said clause from a registered medical practitioner.
A simple reading of the section shows that for purposes of claiming a deduction under this section, an individual, who is resident at the end of the previous year, in respect of an assessment year in which the deduction is claimed, should produce a certificate from a registered medical practitioner as to the permanent physical disability referred to in the said clause. The section shows that once the terms of the section are complied with, by the assessee individual, the deduction is to be allowed under the mandate given by the Legislature because the words used are : "there shall be allowed a deduction of a sum of five thousand rupees". There is no further condition for claiming the said deduction. The section also shows that the Legislature has not left anything to the executive or to any subsidiary legislation so as to whittle down the relief granted by the Legislature. Therefore, even if a circular was issued by the CBDT, it could not have any binding force on the authorities below as it was not a circular beneficial to the assessee. Moreover, on the very nature of these provisions, the circular could give only examples of cases which could be treated as physically handicapped. Such a list, in its very nature, could not be exhaustive and, therefore, if in the circular the type or physical disability suffered by the assessee was not mentioned, it would have no bearing upon the claim of the assessee and, on that basis, the authorities below could pot refuse the claim of the assessee.
6. With this position of law and the admitted facts of the case mentioned supra, the issue is required to be decided. It is found that a registered medical practitioner's certificate was produced before the ITO and the certificate so produced clearly established that the assessee was suffering from pulmonary tuberculosis with bronchial asthma and, in the opinion of the registered medical practitioner, the disease was in the nature of permanent physical disability, in so far as the assessee is concerned. Taking into consideration the permanency and chronicity of the disease, an organic change of a permanent nature has come in the lungs of the assessee and he has been put in a physical disability by which his working capacity has been reduced. This doctor's certificate is not in doubt but the authorities below have placed their own interpretation on this certificate to reject the claim of the assessee. This treatment given by the authorities below to the assessee is unjustified.
7. In the first instance the law givers have not given any discretion to the ITO to question the registered medical practitioner's certificate. Secondly, the nature of the disease mentioned in the certificate can disable a person if it is not treated for a long period. It is not in dispute that the assessee has been suffering from this disease for more than 20 years. Therefore, even coming to the merits of questioning the certificate which the authorities below were not entitled to do as mentioned (sic) supra, the inference drawn by them is without any basis. Therefore, I am of the opinion that the assessee has wrongly been denied a deduction which he was entitled to.
I direct that the sum of Rs. 5,000 be allowed under Section 80U(ii).
8. Before I close, it would be necessary to refer to the point made out by the ITO, by giving the assessed income of the assessee in the immediately preceding assessment years to make his point. In this regard, a cursory reading of Section 80U(ii) shows that the permanent physical disability (other than blindness) from which the resident assessee suffered should be such which has the effect of reducing substantially his capacity to engage in a gainful employment or occupation. In fact, the ITO has seen the income earned by the assessee, which may not necessarily be the income which the assessee would have earned in case permanent physical disability had not reduced substantially his capacity to engage in a gainful employment or occupation. Therefore, the angle from which the ITO examined the issue was wholly erroneous.