Facts

This writ petition is filed by the petitioner, Ravi Agrawal, under Article 32 of the Constitution of India as a Public Interest Litigation. The petition is stated to be filed in the interest of handicapped children whose parents have taken Jeevan Aadhar Policy (Table 114) from the Life Insurance Corporation of India (for short, ‘LIC’) for the livelihood of their children. The petitioner himself is a differently abled person as he is suffering from Cerebral Dysphagia. The grievance of the petitioner pertains to Circular No. CO/CRM/PS/622/23 dated January 24, 2008 which is issued by the Income Tax Department. As per this Circular, no benefit can be paid to the dependent till the proposer/life assured survives. Relevant portion of this Circular is extracted below:

“Representations were received for allowing annuity payments for the             disabled dependant before death of parents/life assured after a certain age. But CBDT/Govt. Of India have refused to do so. Hence it is clarified that no benefit can be paid to dependant till the proposer/life assured survives.” 

Submission of the petitioner before the court was  that by incorporating such a provision, the UOI (respondent) 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. This, according to the petitioner, violates the fundamental right of equality of the handicapped person enshrined in  Article 14 of the Constitution. The petitioner stated to the court that he had lodged a complaint before the Insurance Regulatory and Development Authority of India (IRDA) on 06.08.2014. However, the said Authority in its reply expressed its inability to provide any help having regard to the afore-mentioned Circular dated 24.01.2008 of the CBDT. In essence, the grievance of the petitioner is 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.

Stand of Union of India: In its affidavit UOI giving justification for the aforesaid course of action, submitted that vide Finance Act (No.2), 1998, Section 80DD was substituted for Sections 80DD and 80DDA. The earlier Section 80DD provided for a deduction of Rs.15,000 to an individual or HUF on account of any expenditure incurred for the medical treatment (including nursing), training and rehabilitation of a dependent relative of an individual or member of HUF. The substitution was done to provide for composite section in respect of deduction for expenditure on medical treatment, rehabilitation etc. and for payment made under a scheme of LIC or any other insurer for the dependent disabled person. Submission was that in effect section 80DD amalgamates the provisions of the two sections, namely, 80DD and 80DDA. Thus, both erstwhile section 80DDA and present section 80DD provide that the annuity or lump sum amount for the benefit of the dependent who is a person with disability will be disbursed only after the death of the subscriber. Jeevan Aadhar scheme of LIC has been designed keeping in mind the tax benefits under section 80DDA/80DD of the Act.  It was also submitted by respondent No.1/UOI that the aforesaid provision was specifically provided for in the Act keeping in view the fact that the guardians of children with disability are always faced with the grim reality about the need for maintenance of the disabled after the death of the primary care giver, i.e. the parent or the guardian. Many of them would like to deposit some amount during their lifetime in some special instrument which would ensure payment of a reasonable sum regularly to the disabled on their death. Thus, a separate deduction from Gross Total Income of a specified amount deposited in a year in any scheme of LIC or any other insurer specifically framed for providing recurring or lump sum payment for the maintenance and upkeep of a handicapped dependent after the death of the assessee and approved by the CBDT in this behalf was incorporated in the statute. As the scheme was designed, to a great extent, to assuage the anxiety in the minds of parents/guardians of handicapped dependents about the destiny of their wards on their death and, therefore, to allow for annuity payments to the handicapped dependent under Jeevan Aadhar policy to commence after a certain age of the subscriber is not possible.  Meeting the argument of the petitioner based on Article 14 of the Constitution of India, it was argued by UOI/respondent no.1 that the deduction under section 80DD of the Act has been specifically provided for persons with disability. This is a valid classification for providing specific regime for this class of persons. The stated objective of the scheme was to assure the parents/guardian of a dependant with disability of regular payment of amount for the care of such dependant after the death of the parent/guardian. Attention is drawn to the explanatory memorandum relating to Finance Bill, 1998, which is as under:

 

        “Rationalisation of benefits available to parents and guardian of    physically handicapped and disabled dependant.

        Under the existing provisions of section 80DD, a deduction of Rs.15,000/- is allowed to an individual or Hindu Undivided Family in respect of expenditure incurred on medical treatment of a handicapped dependant. Section 80DDA allows for a separate deduction to a parent or guardian in respect of deposits upto Rs.20,000/- made specified schemes of Life Insurance Corporation or Unit Trust of India. It has been felt that the parents or guardian of handicapped dependants may not have to incur expenditure on medical treatment of a handicapped dependant every year. However, the parent or the guardian would always feel the need to provide for the future maintenance of the disabled dependant. The existing provisions do not take such situations into account. In order to allow a choice to the parent or the guardian to spend either on the medical treatment of or for the future need of the handicapped dependant, as the case may be, the Bill seeks to provide a new section 80DD. With this provision, the parent or the guardian could claim a deduction upto Rs.40,000/- for the medical treatment and for future needs of the handicapped dependant in the manner most suited to his needs.

        The existing sections 80DD and 80DDA would get consequentially merged with increase in overall limit of deduction from Rs.35,000 to Rs.40,000/-.”

 

Issue: Prayers in PIL of petitioner before the apex court:

“(a) Issue a writ of Mandamus or any other appropriate writ, order of direction to Respondents No 1 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.

(b) Issue a writ of Mandamus or any other appropriate writ, order or direction to Respondents No 2 to amend the Scheme of Jeevan Aadhar Policy (Table 114) 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.

(c) Issue a writ of Mandamus or any other appropriate writ, order or direction to Respondents No 2 to pay annuity or a lump sum amount to a person with disability, the guardian/parents of whom already attained the age of 55/58 or will attend the age of 55/58 years in the future.

(d) Issue a writ of Mandamus or any other appropriate writ, order or direction to Respondent No 2 to make proper arrangement for the payment of an annuity/pension to the handicapped dependant after the death of the guardian, without any further formality except the filing of death certificate of the parents/guardian. All the paper formalities for the payment of annuity/pension should be completed by the LIC after premium paying term of the policy and a certificate should be issued by the LIC to the effect that all the formalities for the payment of annuity/pension has been completed, except filing of death certificate of parents/guardian. This issuing of the certificate should be conclusive proof for releasing of annuity/pension, pending till filing of death certificate of parents/guardian.

(e) Pass such other orders and further orders as may be deemed necessary on the facts and in the circumstances of the case.”

In essence, the grievance of the petitioner is 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. Violation of article 14 of constitution of income (right to equality) was also an issue before the apex court in aforesaid background.

Courts view.

Firstly the court held that “As noted from the provisions of Section 80DD as well as from the explanatory memorandum of the Finance Bill, 1998, by which this provision was added, the purpose is to secure the future of the persons suffering from disability, namely, after the death of the parent/guardian. The presumption is that during his/her lifetime, the parent/guardian would take care of his/her handicapped child.”

Secondly it held that “Further, such a benefit of deduction from income for the purposes of tax is admissible subject to the conditions mentioned in Section 80DD of the Act. The Legislature has provided the condition that amount/annuity under the policy is to be released only after the death of the person assured. This is the legislative mandate. There is no challenge to this provision. The prayer is that Section 80DD of the Act be suitably amended. This 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. Though, there is no specific prayer in this behalf, but in the body of writ petition, argument of discrimination is raised. Here, we find that the respondents have 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.”

Finally, on conclusive note, it observed that “In the aforesaid circumstances, we dispose of this writ petition by urging upon respondent No.1 to have a relook into this provision by taking into consideration all the aspects, including those highlighted by the Court in this judgment, and explore the possibility of making suitable amendments”    (WP(C ) No. 1107 of 2017 dt 3 -1 -2019 )

Facts

This writ petition is filed by the petitioner, Ravi Agrawal, under Article 32 of the Constitution of India as a Public Interest Litigation. The petition is stated to be filed in the interest of handicapped children whose parents have taken Jeevan Aadhar Policy (Table 114) from the Life Insurance Corporation of India (for short, ‘LIC’) for the livelihood of their children. The petitioner himself is a differently abled person as he is suffering from Cerebral Dysphagia. The grievance of the petitioner pertains to Circular No. CO/CRM/PS/622/23 dated January 24, 2008 which is issued by the Income Tax Department. As per this Circular, no benefit can be paid to the dependent till the proposer/life assured survives. Relevant portion of this Circular is extracted below:

“Representations were received for allowing annuity payments for the             disabled dependant before death of parents/life assured after a certain age. But CBDT/Govt. Of India have refused to do so. Hence it is clarified that no benefit can be paid to dependant till the proposer/life assured survives.” 

Submission of the petitioner before the court was  that by incorporating such a provision, the UOI (respondent) 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. This, according to the petitioner, violates the fundamental right of equality of the handicapped person enshrined in  Article 14 of the Constitution. The petitioner stated to the court that he had lodged a complaint before the Insurance Regulatory and Development Authority of India (IRDA) on 06.08.2014. However, the said Authority in its reply expressed its inability to provide any help having regard to the afore-mentioned Circular dated 24.01.2008 of the CBDT. In essence, the grievance of the petitioner is 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.

Stand of Union of India: In its affidavit UOI giving justification for the aforesaid course of action, submitted that vide Finance Act (No.2), 1998, Section 80DD was substituted for Sections 80DD and 80DDA. The earlier Section 80DD provided for a deduction of Rs.15,000 to an individual or HUF on account of any expenditure incurred for the medical treatment (including nursing), training and rehabilitation of a dependent relative of an individual or member of HUF. The substitution was done to provide for composite section in respect of deduction for expenditure on medical treatment, rehabilitation etc. and for payment made under a scheme of LIC or any other insurer for the dependent disabled person. Submission was that in effect section 80DD amalgamates the provisions of the two sections, namely, 80DD and 80DDA. Thus, both erstwhile section 80DDA and present section 80DD provide that the annuity or lump sum amount for the benefit of the dependent who is a person with disability will be disbursed only after the death of the subscriber. Jeevan Aadhar scheme of LIC has been designed keeping in mind the tax benefits under section 80DDA/80DD of the Act.  It was also submitted by respondent No.1/UOI that the aforesaid provision was specifically provided for in the Act keeping in view the fact that the guardians of children with disability are always faced with the grim reality about the need for maintenance of the disabled after the death of the primary care giver, i.e. the parent or the guardian. Many of them would like to deposit some amount during their lifetime in some special instrument which would ensure payment of a reasonable sum regularly to the disabled on their death. Thus, a separate deduction from Gross Total Income of a specified amount deposited in a year in any scheme of LIC or any other insurer specifically framed for providing recurring or lump sum payment for the maintenance and upkeep of a handicapped dependent after the death of the assessee and approved by the CBDT in this behalf was incorporated in the statute. As the scheme was designed, to a great extent, to assuage the anxiety in the minds of parents/guardians of handicapped dependents about the destiny of their wards on their death and, therefore, to allow for annuity payments to the handicapped dependent under Jeevan Aadhar policy to commence after a certain age of the subscriber is not possible.  Meeting the argument of the petitioner based on Article 14 of the Constitution of India, it was argued by UOI/respondent no.1 that the deduction under section 80DD of the Act has been specifically provided for persons with disability. This is a valid classification for providing specific regime for this class of persons. The stated objective of the scheme was to assure the parents/guardian of a dependant with disability of regular payment of amount for the care of such dependant after the death of the parent/guardian. Attention is drawn to the explanatory memorandum relating to Finance Bill, 1998, which is as under:

 

        “Rationalisation of benefits available to parents and guardian of    physically handicapped and disabled dependant.

        Under the existing provisions of section 80DD, a deduction of Rs.15,000/- is allowed to an individual or Hindu Undivided Family in respect of expenditure incurred on medical treatment of a handicapped dependant. Section 80DDA allows for a separate deduction to a parent or guardian in respect of deposits upto Rs.20,000/- made specified schemes of Life Insurance Corporation or Unit Trust of India. It has been felt that the parents or guardian of handicapped dependants may not have to incur expenditure on medical treatment of a handicapped dependant every year. However, the parent or the guardian would always feel the need to provide for the future maintenance of the disabled dependant. The existing provisions do not take such situations into account. In order to allow a choice to the parent or the guardian to spend either on the medical treatment of or for the future need of the handicapped dependant, as the case may be, the Bill seeks to provide a new section 80DD. With this provision, the parent or the guardian could claim a deduction upto Rs.40,000/- for the medical treatment and for future needs of the handicapped dependant in the manner most suited to his needs.

        The existing sections 80DD and 80DDA would get consequentially merged with increase in overall limit of deduction from Rs.35,000 to Rs.40,000/-.”

 

Issue: Prayers in PIL of petitioner before the apex court:

“(a) Issue a writ of Mandamus or any other appropriate writ, order of direction to Respondents No 1 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.

(b) Issue a writ of Mandamus or any other appropriate writ, order or direction to Respondents No 2 to amend the Scheme of Jeevan Aadhar Policy (Table 114) 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.

(c) Issue a writ of Mandamus or any other appropriate writ, order or direction to Respondents No 2 to pay annuity or a lump sum amount to a person with disability, the guardian/parents of whom already attained the age of 55/58 or will attend the age of 55/58 years in the future.

(d) Issue a writ of Mandamus or any other appropriate writ, order or direction to Respondent No 2 to make proper arrangement for the payment of an annuity/pension to the handicapped dependant after the death of the guardian, without any further formality except the filing of death certificate of the parents/guardian. All the paper formalities for the payment of annuity/pension should be completed by the LIC after premium paying term of the policy and a certificate should be issued by the LIC to the effect that all the formalities for the payment of annuity/pension has been completed, except filing of death certificate of parents/guardian. This issuing of the certificate should be conclusive proof for releasing of annuity/pension, pending till filing of death certificate of parents/guardian.

(e) Pass such other orders and further orders as may be deemed necessary on the facts and in the circumstances of the case.”

In essence, the grievance of the petitioner is 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. Violation of article 14 of constitution of income (right to equality) was also an issue before the apex court in aforesaid background.

Courts view.

Firstly the court held that “As noted from the provisions of Section 80DD as well as from the explanatory memorandum of the Finance Bill, 1998, by which this provision was added, the purpose is to secure the future of the persons suffering from disability, namely, after the death of the parent/guardian. The presumption is that during his/her lifetime, the parent/guardian would take care of his/her handicapped child.”

Secondly it held that “Further, such a benefit of deduction from income for the purposes of tax is admissible subject to the conditions mentioned in Section 80DD of the Act. The Legislature has provided the condition that amount/annuity under the policy is to be released only after the death of the person assured. This is the legislative mandate. There is no challenge to this provision. The prayer is that Section 80DD of the Act be suitably amended. This 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. Though, there is no specific prayer in this behalf, but in the body of writ petition, argument of discrimination is raised. Here, we find that the respondents have 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.”

Finally, on conclusive note, it observed that “In the aforesaid circumstances, we dispose of this writ petition by urging upon respondent No.1 to have a relook into this provision by taking into consideration all the aspects, including those highlighted by the Court in this judgment, and explore the possibility of making suitable amendments”    (WP(C ) No. 1107 of 2017 dt 3 -1 -2019 )

 

Editorial :  Considering the several difficult situations where the handicapped person may need the payment on annuity or lumpsum basis even during the life time of their parents / guardians, it is for the legislature to take care of theses aspects and to provide suitable provision by making necessary amendments in S.80DD . We hope the legislature will make necessary amendment in the  Finance Bill  2021.

 

“Fill the brain with huge thoughts, highest ideals, place them day and night before you and out of that will come Great Work.”

  SWAMI VIVEKANANDA