Section 80U relief cannot be refused merely because a disabled assessee earns income; earning capacity must be examined.

Relief under section 80U of the Income-tax Act was considered in the context of an assessee with accepted physical disability who nevertheless earned taxable income from business. The relevant test was not the mere existence of income, but whether the disability affected the assessee's income-earning capacity having regard to the nature and extent of the impairment and the source of income. On the facts noted, the denial of relief based only on continued earnings was unsustainable because no material showed that the disability had no impact on earning capacity. The matter was therefore remanded for fresh consideration under the correct legal criteria.

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Issues: Whether relief under section 80U of the Income-tax Act, 1961 could be denied merely because the assessee had taxable income and was engaged in business, despite proof of physical disability.

Analysis: The assessee's disability was accepted on medical evidence. The rejection of relief rested only on the fact that he continued to earn income as a partner in a vegetable , but that was not the correct for deciding entitlement under section 80U. The relevant inquiry was whether the disability affected the assessee's income-earning capacity, having regard to the nature and extent of the disability and the source of income. Since there was no material to show that the disability had no impact on his earning capacity, the order was passed without applying the proper criteria.

Conclusion: Relief under section 80U could not be denied on the sole ground that the assessee had income. The assessee succeeded, and the matter was remanded for fresh consideration in accordance with law.

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