Supreme Court: The 3-judge Bench of Dr. AK Sikri, Ashok Bhushan and SA Nazeer, JJ asked the Central Government to make necessary changes in Section 80DD of the Income Tax Act, 1961 after a differently abled person file a PIL before it, claiming that the said the provision violates the fundamental right of equality of the handicapped person enshrined in Article 14 of the Constitution as it denies:
“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.”
Section 80DD(2)(a) of the IT Act provides for payment of annuity of lump sum amount for the 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 (HUF) in whose name subscription to the scheme stipulated in the said provision has been made. The petitioner, however, argued that such benefit 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 as 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.
Finding force in petitioner’s submission, the Court said that there can be such cases, 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.”
Stating that there may be many other such situations, the Court said 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. Hence, it urged the Centre to have a relook into this provision by taking into consideration all the aspect. [Ravi Agrawal v. Union of India, 2019 SCC OnLine SC 5, decided on 03.01.2019]
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.