Ravi Agrawal v. Union of India and Another
[Citation -2019-LL-0103-1]

Citation 2019-LL-0103-1
Appellant Name Ravi Agrawal
Respondent Name Union of India and Another
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 03/01/2019
Judgment View Judgment
Keyword Tags benefit of deduction • expenditure incurred • medical treatment • insurance policy • lump sum payment • public interest • incentive • physical disability • mental disability
Bot Summary: The deduction under clause of sub-section shall be allowed only if the following conditions are fulfilled, namely: the scheme referred to in clause of sub-section provides for payment of annuity or lump sum amount for the 3 benefit of a dependant, being a person with disability, in the event of the death of the individual or the member of the Hindu undivided family in whose name subscription to the scheme has been made; the assessee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability. 11) Only NMS is allowed, not NMG. 12) Besides proposal form No. 3000, the life assured will be required to submit an addendum declaring the disability of the handicapped dependant and a certificate stating that handicapped dependant is suffering from a permanent physical 5 disability or having mental retardatoin as per rules A physician, a surgeon, an oculist or a psychiatrist working in Govt hospital should clearly state that due to disability such person s capacity for normal work or engaging in a gainful employment or occupation is considerably reduced. 6) Submission of the petitioner is that by incorporating such a provision, the respondents 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. 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 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. 15) At the outset, it may be observed that Section 80DD of the Act is a provision made by the Parliament under the Act in order to give incentive to the persons whose dependants are persons with disability. 17) To some extent, the grievance of the petitioner may be justified in this behalf in the plea that when there is a need to get these funds even for the benefit of handicapped persons, that will not be given to such a person only because of the reason that the assured who is a parent/guardian is still alive. If the legislature reasonably classifies persons for legislative purposes so as to bring them under a well-defined class, it is not open to challenge on the ground of denial of equal treatment that the law does not apply to other persons.


1 REPORTABLE IN SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION (CIVIL) NO. 1107 OF 2017 RAVI AGRAWAL .....PETITIONER(S) VERSUS UNION OF INDIA AND ANOTHER .....RESPONDENT(S) JUDGMENT A.K. SIKRI, J. This writ petition is filed by petitioner, Ravi Agrawal, under Article 32 of Constitution of India as Public Interest Litigation. petition is stated to be filed in interest of handicapped children whose parents have taken Jeevan Aadhar Policy (Table 114) from Life Insurance Corporation of India (for short, LIC ) for livelihood of their children. petitioner himself is differently abled person as he is suffering from Cerebral Dysphagia. petitioner also is income tax assessee whose Permanent Account Number (PAN) issued by Signature Not Verified Income Tax Department is AAPPA5222M. He has stated that he has no Digitally signed by ASHWANI KUMAR Date: 2019.01.03 16:46:43 IST Reason: personal interest in subject matter raised in this petition which he has filed on behalf of handicapped children. 2 2) Section 80DD of Income Tax Act, 1961 (hereinafter referred to as Act ) provides for payment of annuity of lump sum amount for benefit of dependant, being person with disability, in event of death of individual or member of Hindu Undivided Family (HUF) in whose name subscription to scheme stipulated in said provision has been made. Though it is long provision, for our purposes it would be suffice to reproduce sub-sections (1), (2) and (3) thereof, which are as under: "80DD. Deduction in respect of maintenance including medical treatment of dependant who is person with disability. (1) Where assessee, being individual or Hindu undivided family, who is resident in India, has, during previous year, (a) incurred any expenditure for medical treatment (including nursing), training and rehabilitation of dependant, being person with disability; or (b) paid or deposited any amount under scheme framed in this behalf by Life Insurance Corporation or any other insurer or Administrator or specified company subject to conditions specified in sub-section (2) and approved by Board in this behalf for maintenance of dependant, being person with disability, assessee shall, in accordance with and subject to provisions of this section, be allowed deduction of sum of seventy-five thousand rupees from his gross total income in respect of previous year: Provided that where such dependant is person with severe disability, provisions of this sub-section shall have effect as if for words seventy-five thousand rupees , words one hundred and twenty-five thousand rupees had been substituted. (2) deduction under clause (b) of sub-section (1) shall be allowed only if following conditions are fulfilled, namely: (a) scheme referred to in clause (b) of sub-section (1) provides for payment of annuity or lump sum amount for 3 benefit of dependant, being person with disability, in event of death of individual or member of Hindu undivided family in whose name subscription to scheme has been made; (b) assessee nominates either dependant, being person with disability, or any other person or trust to receive payment on his behalf, for benefit of dependant, being person with disability. (3) If dependant, being person with disability, predeceases individual or member of Hindu undivided family referred to in sub-section (2), amount equal to amount paid or deposited under clause (b) of sub-section (1) shall be deemed to be income of assessee of previous year in which such amount is received by assessee and shall accordingly be chargeable to tax as income of that previous year. 3) As per clause (b) of sub-section (1), if assessee, being individual or HUF, has paid or deposited any amount under scheme framed in this behalf by LIC or any other insurer etc., such assessee is entitled to deduction of sum of Rs.75,000/- from his Gross Total Income in respect of previous year. It is subject to conditions which are specified in sub-section (2) of Section 80DD. We are concerned with condition mentioned in clause (a) of sub-section (2). As per this condition, disabled dependant would get annuity or lumpsum payment in event of death of individual or death of member of HUF, in whose name subscription to scheme has been made. In order to give effect to aforesaid special provision meant for benefit of persons with disability, LIC has floated insurance policy named Jeevan Aadhar (Table 114) for benefit of handicapped dependants. Accordingly, those assessees who get 4 Jeevan Aadhar policy for benefit of handicapped dependants and pay or deposit amount under said policy become entitled to deduction mentioned in Section 80DD of Act. Synopsis of said policy introduced by LIC gives glimpse of salient features of this plan and is, thus, reproduced below: "A) Synopsis of Plan 1) Age at entry (life assured) Minimum 22 years, Maximum 65 years. (handicapped dependant 1 year) age of life assured and handicapped dependant are required to be admitted on basis of standard age proof. 2) Maximum premium ceasing age 75 years. 3) Premium paying term 10, 15, 20, 25, 30 & 35 years. 4) Policy term this is whole life plan. 5) Sum assured Minimum 50000, Maximum no limit. 6) Mode of payment Yearly, Half-Yearly, Quarterly, Monthly, SSS, Single also. 7) Rebate on mode of payment Yearly 3% of tabular premium, Half-yearly 1.5% of tabular premium, Quarterly/ Monthly/SSS no rebate. 8) Rebate on high sum assured - 25,000 to 49,999 Re.1/- per 1000 sum assured 50,000 and above Rs.2/- per 1000 sum assured. 9) All extra mortality rate class are allowed. 10) All female categories i.e. I, II, III are alloewd. 11) Only NMS is allowed, not NMG. 12) Besides proposal form No. 3000, life assured (proposer) will be required to submit addendum declaring disability of handicapped dependant and certificate stating that handicapped dependant is suffering from permanent physical 5 disability (including blindness) or having mental retardatoin as per rules physician, surgeon, oculist or psychiatrist working in Govt hospital should clearly state that due to disability such person s capacity for normal work or engaging in gainful employment or occupation is considerably reduced. 4) grievance of petitioner pertains to Circular No. CO/CRM/PS/622/23 dated January 24, 2008 which is issued by Income Tax Department. As per this Circular, no benefit can be paid to dependant till proposer/life assured survives. Relevant portion of this Circular is extracted below: "Representations were received for allowing annuity payments for disabled dependant before death of parents/life assured after 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 proposer/life assured survives. 5) Jeevan Aadhar plan also mentions aforesaid Circular on basis of which clause pertaining to maturity claim in policy is mentioned as under: "F. MATURITY CLAIM 1) IN FORCE POLICY OR FULLY PAID UP POLICY Policy does not have maturity claim. provisions of maturity claim under whole life policies i.e. after completing age of 80 years by life assured: is not applicable under this policy. Representations were received for allowing annuity payments for disabled dependant before death of parents/life assured after 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 proposer/life assured survives. (co/crm/ps/622/23 dated 24/01/2008). It is, thus, clear that even when entire subscription is paid 6 under this policy meant for handicapped persons, this policy does not have maturity claim. amount is payable to dependant only on demise of proposer/life assured. 6) Submission of petitioner is that by incorporating such provision, respondents are denying benefit of insurance to handicapped persons to get annuity or lumpsum amount during lifetime of parent/guardian of such handicapped person, whereas beneficiaries of other life insurance policy are getting annuity during lifetime of person who has taken insurance policy. This, according to petitioner, violates fundamental right of equality of handicapped person enshrined in Article 14 of Constitution. 7) petitioner states that he had lodged complaint before Insurance Regulatory and Development Authority of India (IRDA) on August 06, 2014. However, said Authority in its reply expressed its inability to provide any help having regard to afore-mentioned Circular dated January 24, 2008 of CBDT. petitioner even approached Court of Chief Commissioner for Persons with Disabilities raising aforesaid grievance. Chief Commissioner heard matter on various dates and passed order advising CBDT to once again examine matter in consultation with Department of Empowerment of Persons with Disabilities, Ministry of 7 Social Justice and Empowerment, as well as National Trust. Relevant portion thereof reads as under: "11. During hearing on 10.03.2015, it was observed that Central Board of Direct Taxes (CBDT) had already made submission that issue of allowing for annuity payment to dependant with disability under Jeevan Aadhar Policy to commence after certain age of subscriber at 55, 58 or 60 years was considered during budgetary exercise for 2007-08 and same was not found to be acceptable. 12. In light of mandate of Chief Commissioner for Persons with Disabilities, no direction can be given to CBDT or LIC as there is no allegation of non implementation of stated policy or its terms & conditions. It is, however, view of this office that Jeevan Aadhar is not only LIC Policy that gives benefit of Income Tax exemption and only few parents of persons with disabilities may be tax payers to be able to avail tax exemption, such well intentioned policy should not be linked to such benefits as tax exemption. As primary objective of policy is to benefit person with disability, he/she should start getting annuity as early as possible in his/her lifetime. 13. With regard to allegation of complainant in Case No. 2602/1093/2014 that LIC Agents and professionals told him at time of selling policy that his child would start getting pension @ Rs.2000/- per month for every one lakh of insured amount is concerned, LIC is advised to investigate matter and intimate outcome to complainant under intimation to this Court within two months from date of receipt of these Record of proceedings. In case it is established that it is case of mis-selling, then LIC is advised to suitably compensate complainant. 14. As National Trust was not represented during hearing despite notice and it has suggested that insured amount should be disbursed to beneficiaries through its LICs, National rust is directed to get in touch with LIC and obtain details of Jeevan Aadhar Policy holders. After obtaining consent of policy holders for distribution of annuity through LLCs National Trust shall inform LIC for making National Trust as nominee/Trusty for receiving amount of annuity in respect of such policy holders on terms & conditions as may be finalized between LIC and National Trust and ensure that mechanism is put in place to disburse amount of annuity to disabled dependants of policy holders till dependant is alive. 8 15. Both complainants strongly felt that like other policy holders, Jeevan Aadhar Policy should also be allowed to mature after 55 years of age of proposer and annuity amount should be disbursed through LICs of National Trust. 16. In light of demand of complainants, CBDT is advised to once again examine matter in consultation with Department of Empowerment of Persons with Disabilities, Ministry of Social Justice & Empowerment and National Trust. 8) Chief Commissioner had even sent reminder thereof to CBDT to look into matter. However, nothing moved at level of CBDT. In fact, petitioner thereafter lodged his grievance with Prime Minister s Office through Centralised Public Grievance Redressal and Monitoring System Portal on October 15, 2015. As he did not receive any response, it provoked petitioner to file instant writ petition with following prayers: "(a) Issue writ of Mandamus or any other appropriate writ, order of direction to Respondents No 1 to amend Section 80DD of Income Tax Act to allow for payment of annuity or lump sum amount to person with disability on attaining age of 55/58 years by guardian/parent of disabled person, in addition to in event of death of guardian/parent. (b) Issue writ of Mandamus or any other appropriate writ, order or direction to Respondents No 2 to amend Scheme of Jeevan Aadhar Policy (Table 114) to allow for payment of annuity or lump sum amount to person with disability on attaining age of 55/58 years by guardian/parent of disabled person, in addition to in event of death of guardian/parent. (c) Issue writ of Mandamus or any other appropriate writ, order or direction to Respondents No 2 to pay annuity or lump sum amount to person with disability, guardian/parents of whom already attained age of 55/58 or will attend age of 55/58 years in future. 9 (d) Issue writ of Mandamus or any other appropriate writ, order or direction to Respondent No 2 to make proper arrangement for payment of annuity/pension to handicapped dependant after death of guardian, without any further formality except filing of death certificate of parents/guardian. All paper formalities for payment of annuity/pension should be completed by LIC after premium paying term of policy and certificate should be issued by LIC to effect that all formalities for payment of annuity/pension has been completed, except filing of death certificate of parents/guardian. This issuing of 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 facts and in circumstances of case. 9) In essence, grievance of petitioner is that benefit of Jeevan Aadhar policy should not be deferred till death of assessee/life assured and it should be allowed to be utilised for benefit of disabled person even during lifetime of assessee. 10) Union of India has filed its affidavit giving justification for aforesaid course of action. In this regard, it is submitted that vide Finance Act (No.2), 1998, Section 80DD was substituted for Sections 80DD and 80DDA. earlier Section 80DD provided for deduction of Rs.15,000/- to individual or HUF on account of any expenditure incurred for medical treatment (including nursing), training and rehabilitation of dependant relative of individual or member of HUF. substitution was done to provide for composite Section in respect of deduction for expenditure on medical treatment, rehabilitation etc. and 10 for payment made under scheme of LIC or any other insurer for dependant disabled person. Submission is that in effect Section 80DD amalgamates provisions of two sections, namely, 80DD and 80DDA. Thus, both erstwhile Section 80DDA and present Section 80DD provide that annuity or lump sum amount for benefit of dependant who is person with disability will be disbursed only after death of subscriber. Jeevan Aadhar scheme of LIC has been designed keeping in mind tax benefits under Section 80DDA/80DD of Act. 11) It is also submitted by respondent No.1/Union of India that aforesaid provision was specifically provided for in Act keeping in view fact that guardians of children with disability are always faced with grim reality about need for maintenance of disabled after death of primary care giver, i.e. parent or guardian. Many of them would like to deposit some amount during their lifetime in some special instrument which would ensure payment of reasonable sum regularly to disabled on their death. Thus, separate deduction from Gross Total Income of specified amount deposited in year in any scheme of LIC or any other insurer specifically framed for providing recurring or lump sum payment for maintenance and upkeep of handicapped dependant after death of assessee and approved by CBDT in this behalf was incorporated 11 in statute. As scheme was designed to, to great extent, to assuage anxiety in minds of parents/guardians of handicapped dependants about destiny of their wards on their death and, therefore, to allow for annuity payments to handicapped dependant under Jeevan Aadhar policy to commence after certain age of subscriber is not possible. 12) Meeting argument of petitioner based on Article 14 of Constitution of India, it is argued that deduction under Section 80DD of Act has been specifically provided for persons with disability. This is valid classification for providing specific regime for this class of persons. stated objective of scheme was to assure parents/guardian of dependant with disability of regular payment of amount for care of such dependant after death of parent/guardian. Attention is drawn to 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 existing provisions of section 80DD, deduction of Rs.15,000/- is allowed to individual or Hindu Undivided Family in respect of expenditure incurred on medical treatment of handicapped dependant. Section 80DDA allows for separate deduction to 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 parents or guardian of handicapped dependants may not have to incur expenditure on medical treatment of handicapped dependant every year. However, parent or guardian would always feel need to provide for future maintenance of disabled 12 dependant. existing provisions do not take such situations into account. In order to allow choice to parent or guardian to spend either on medical treatment of or for future need of handicapped dependant, as case may be, Bill seeks to provide new section 80DD. With this provision, parent or guardian could claim deduction upto Rs.40,000/- for medical treatment and for future needs of handicapped dependant in manner most suited to his needs. existing sections 80DD and 80DDA would get consequentially merged with increase in overall limit of deduction from Rs.35,000 to Rs.40,000/-. 13) Number of judgments were cited by learned Additional Solicitor General appearing for Union of India to placate argument of discrimination based on Article 14 of Constitution. Insofar as respondent No.2/LIC is concerned, its simple answer is that clause in policy is as per prescribed norm approved by CBDT. Of course, LIC has also supported reasons given by Union of India behind aforesaid Circular. 14) We have considered respective submissions. 15) At outset, it may be observed that Section 80DD of Act is provision made by Parliament under Act in order to give incentive to persons whose dependants are persons with disability. Incentive is to give such persons concessions in income tax by allowing deductions of amount specified in Section 80DD of Act in case such parents/guardians of dependants with disability take insurance policies of nature specified in this provision. Purpose is to 13 encourage these parents/guardians to make regular payments for benefit of dependants with disability. In that sense, Legislature, in its wisdom thought it appropriate to allow deductions in respect of such contribution made by parent/guardian in form of premium paid in respect of such insurance policies. Of course, this deduction is admissible only when conditions stipulated therein are satisfied. 16) Insofar as insurance policy is concerned, it incorporates condition (which is impugned in present writ petition) to effect that amount shall not be given to he handicapped persons during lifetime of parent/guardian/life assured. This is in conformity with Section 80DD(2)(b) of Act. 17) To some extent, grievance of petitioner may be justified in this behalf in plea that when there is need to get these funds even for benefit of handicapped persons, that will not be given to such person only because of reason that assured who is parent/guardian is still alive. This would happen even when entire premium towards said policy has been paid. policy does not have maturity claim. Thus, after making entire premium for number of years, i.e. during duration of policy, amount would still remain with LIC. That may be so. However, purpose behind such policy is altogether different. As noted from provisions of 14 Section 80DD as well as from explanatory memorandum of Finance Bill, 1998, by which this provision was added, purpose is to secure future of persons suffering from disability, namely, after death of parent/guardian. presumption is that during his/her lifetime, parent/guardian would take care of his/her handicapped child. 18) Further, such benefit of deduction from income for purposes of tax is admissible subject to conditions mentioned in Section 80DD of Act. Legislature has provided condition that amount/annuity under policy is to be released only after death of person assured. This is legislative mandate. There is no challenge to this provision. prayer is that Section 80DD of Act be suitably amended. This Court cannot give direction to Parliament to amend or make statutory provision in specified manner. Court can only determine, in exercise of its power of judicial review, as to whether such provision passes muster of Constitutional Scheme. Though, there is no specific prayer in this behalf, but in body of writ petition, argument of discrimination is raised. Here, we find that respondents have been able to successfully demonstrate that main provision is based on reasonable classification, which as valid rational behind it and there is specific objective sought to be achieved thereby. 15 19) In State of U.P. and Another v. Kamla Palace, (2000) 1 SCC 557, this Court, while considering fiscal statute in relation to Article 14 of Constitution, has stated as under: "11. Article 14 does not prohibit reasonable classification of persons, objects and transactions by legislature for purpose of attaining specific ends. To satisfy test of permissible classification, it must not be arbitrary, artificial or evasive but must be based on some real and substantial distinction bearing just and reasonable relation to object sought to be achieved by legislature. (See Special Courts Bill, 1978, Re, seven-Judge Bench; R.K. Garg v. Union of India, five-Judge Bench.) It was further held in R.K. Garg case that laws relating to economic activities or those in field of taxation enjoy greater latitude than laws touching civil rights such as freedom of speech, religion etc. Such legislation may not be struck down merely on account of crudities and inequities inasmuch as such legislations are designed to take care of complex situations and complex problems which do not admit of solutions through any doctrinaire approach or straitjacket formulae... . 20) Further, in S.K. Dutta, Income Tax Officer v. Lawrence Singh Ingty, (1968) 2 SCR 165, Constitution Bench of this court held as under: "8. It is not in dispute that taxation laws must also pass test of Article 14. That has been laid down by this Court in Moopil Nair v. State of Kerala. But as observed by this Court in East India Tobacco Co. v. State of Andhra Pradesh, in deciding whether taxation law is discriminatory or not it is necessary to bear in mind that State has wide discretion in selecting persons or objects it will tax, and that statute is not open to attack on ground that it taxes some persons or objects and not others; it is only when within range of its selection, law operates unequally, and that cannot be justified on basis of any valid classification, that it would be violative of Article 14. It is well settled that State does not have to tax everything in order to tax something. It is allowed to pick and choose districts, objects, persons, methods and even rates for taxation if it does so reasonably. 16 21) In State of A.P. and Others v. Nallamilli Rami Reddi and Others, (2001) 7 SCC 708, this Court held: "8. What Article 14 of Constitution prohibits is class legislation and not classification for purpose of legislation . If legislature reasonably classifies persons for legislative purposes so as to bring them under well-defined class, it is not open to challenge on ground of denial of equal treatment that law does not apply to other persons. test of permissible classification is twofold: (i) that classification must be founded on intelligible differentia which distinguishes persons grouped together from others who are left out of group, and (ii) that differentia must have rational connection to object sought to be achieved. Article 14 does not insist upon classification, which is scientifically perfect or logically complete. classification would be justified unless it is patently arbitrary. If there is equality and uniformity in each group, law will not become discriminatory, though due to some fortuitous circumstance arising out of peculiar situation some included in class get advantage over others so long as they are not singled out for special treatment... 22) petitioner may be justified in pointing out that there could be harsh cases where handicapped persons may need payment on annuity or lumpsum basis even during 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 person who was in service and has retired from said service and is not having any source of income. In such cases, it may be difficult for such parent/guardian to take care of medical needs of his/her disabled child. Even when he/she has paid full premium, handicapped person is not able to receive any annuity only because parent/guardian of such handicapped person is still alive. There may be many other such situations. However, it is for Legislature to take 17 care of these aspects and to provide suitable provision by making necessary amendments in Section 80DD of Act. In fact, Chief Commissioner for Persons with Disabilities has also felt that like other police holders, Jeevan Aadhar policy should also be allowed to mature after 55 years of age of proposer and annuity amount should be disbursed through LLCs or National Trust. 23) In aforesaid circumstances, we dispose of this writ petition by urging upon respondent No.1 to have relook into this provision by taking into consideration all aspects, including those highlighted by Court in this judgment, and explore possibility of making suitable amendments. .............................................J. (A.K. SIKRI) .............................................J. (ASHOK BHUSHAN) .............................................J. (S. ABDUL NAZEER) NEW DELHI; JANUARY 03, 2019. Ravi Agrawal v. Union of India and Another
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