Section 80DD/CBDT Circular not violates right of equality of handicapped person by providing payment of annuity only on death of guardian/parent- Supreme Court
ABCAUS Case Law Citation:
ABCAUS 2694 (2019) (01) SC
Important Case Laws Cited/relied upon:
State of U.P. and Another v. Kamla Palace, (2000) 1 SCC 557
S.K. Dutta, Income Tax Officer v. Lawrence Singh Ingty, (1968) 2 SCR 165
State of A.P. and Others v. Nallamilli Rami Reddi and Others, (2001) 7 SCC 708
Section 80DD of the Income Tax Act, 1961 (the Act) provides for payment of annuity of lump sum amount for the benefit of a dependent, being a person with disability, in the event of the death of the individual or the member of the Hindu Undivided Family (HUF) in whose name subscription to the scheme stipulated in the said provision has been made.
Jeevan Aadhar insurance policy of the LIC is meant for the benefit of the handicapped dependants under said section 80DD. Accordingly, those assessees who get the Jeevan Aadhar policy for the benefit of handicapped dependants and pay or deposit the amount under the said policy become entitled to the deduction mentioned in Section 80DD of the Act
The petitioner had filed a Public Interest Litigation in the interest of handicapped children whose parents have taken Jeevan Aadhar Policy from the Life Insurance Corporation of India (LIC) for the livelihood of their children.
The grievance of the petitioner was CBDT Circular No. CO/CRM/PS/622/23 dated January 24, 2008. As per this Circular, no benefit can be paid to the dependant till the proposer/life assured survives. The Jeevan Aadhar plan also mentions the aforesaid Circular stating that Policy does not have maturity claim.
In other words, even when the entire subscription is paid under this policy meant for handicapped persons, this policy does not have maturity claim. The amount is payable to the dependant only on the demise of the proposer/life assured.
The submission of the petitioner was that by incorporating such a provision, the respondent Government of India and LIC are denying the benefit of the insurance to the handicapped persons to get annuity or lumpsum amount during the lifetime of the parent/guardian of such a handicapped person, whereas the beneficiaries of other life insurance policy are getting annuity during the lifetime of the person who has taken insurance policy. According to the petitioner, it violates the fundamental right of equality of the handicapped person enshrined in Article 14 of the Constitution.
It was further stated that the IRDA, on the complaint of the Petitioner in this regard, expressed its inability in view of the CBDT Circular.
The petitioner even approached the Court of the Chief Commissioner for Persons with Disabilities raising the aforesaid grievance. The Chief Commissioner passed the order advising the CBDT to once again examine the matter in consultation with the Department of Empowerment of Persons with Disabilities, Ministry of Social Justice and Empowerment, as well as National Trust.
The Petitioner stated that the Chief Commissioner had even sent reminder to the CBDT to look into the matter. The petitioner thereafter lodged his grievance with the Prime Minister’s Office through Centralised Public Grievance Redressal and Monitoring System Portal but he he did not receive any response.
Thus is how the Petitioner had filed the instant Writ Petition seeking inter alia directions to UOI/CBDT to amend Section 80DD of the Income Tax Act to allow for the payment of annuity or lump sum amount to a person with disability on attaining the age of 55/58 years by the guardian/parent of disabled person, in addition to in the event of death of the guardian/parent.
To sum up, the grievance of the petitioner was that benefit of Jeevan Aadhar policy should not be deferred till the death of the assessee/life assured and it should be allowed to be utilised for the benefit of the disabled person even during the lifetime of the assessee.
The Hon’ble Supreme Court opined that the Legislature had provided the condition that amount/annuity under the policy is to be released only after the death of the person assured. The Court cannot give a direction to the Parliament to amend or make a statutory provision in a specified manner. The Court can only determine, in exercise of its power of judicial review, as to whether such a provision passes the muster of the Constitutional Scheme.
In view of the affidavit of the Union of India giving justification for the said provisions, the Hon’ble Supreme Court opined that the respondents had been able to successfully demonstrate that the main provision is based on reasonable classification, which as a valid rational behind it and there is a specific objective sought to be achieved thereby.
The Hon’ble Supreme Court observed that the petitioner may be justified in pointing out that there could be harsh cases where handicapped persons may need the payment on annuity or lumpsum basis even during the lifetime of their parents/guardians. For example, where guardian has become very old but is still alive, though he is not able to earn any longer or he may be a person who was in service and has retired from the said service and is not having any source of income. In such cases, it may be difficult for such a parent/guardian to take care of the medical needs of his/her disabled child. Even when he/she has paid full premium, the handicapped person is not able to receive any annuity only because the parent/guardian of such handicapped person is still alive. There may be many other such situations.
However, the Hon’ble Supreme Court stated that it is for the Legislature to take care of these aspects and to provide suitable provision by making necessary amendments in Section 80DD of the Act.
The Hon’ble Supreme Court noted that the Chief Commissioner for Persons with Disabilities had also felt that like other police holders, Jeevan Aadhar policy should also be allowed to mature after 55 years of age of the proposer and the annuity amount should be disbursed through the LLCs or National Trust.
Accordingly, the Hon’ble Supreme Court disposed of the writ petition by urging upon the Government to relook at the provisions by taking into consideration all the aspects, including those highlighted by the Court in this judgment, and explore the possibility of making suitable amendments.
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Hon’ble Court convinced that payment of annuity under the policy should be more suitable to a handicap person during the lifetime of the guardian vide para 22 and para 23 of the Judgement. The relief to the under mentioned person could be granted within the existing legislative framework :-
1. A person not covered under the tax paying limit of Income Tax.
2. The person who, although covered under the income tax paying limit, but has not availed the tax exemption for taking this policy.
Further fundamental rights of handicapped person and fundamental rights of his parent/policy holder should be distinguished. This petition was filed to protect the Fundamental Rights of disabled persons, but the Government of India wrongly argued/mentioned about rationality of tax exemption under section 80 DD of the Income Tax Act, 1961 provided to the parent of the handicapped person. Section 80 DD is providing tax deduction to the parent/guardian and not to the handicapped person. The petitioner has not challenged the fundamental right of the parent/guardian to get the tax exemption for taking this insurance policy for his handicapped dependent. The fundamental rights of the handicapped person should not be denied on the ground that the tax exemption was availed by their parent, because the tax exemption was not availed by the disabled person.