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Synopsis

The Supreme Court has declined to accept a plea to make an amendment into Section 80DD of the Income Tax Act for deduction in respect of maintenance including medical treatment of a dependent who is a person with a disability, apply retrospectively.

A bench of Justices B V Nagarathna and N Kotiswar Singh felt that implementing the amendment retrospectively is neither beneficial for disabled individuals nor within the court's power to enforce.

"This is particularly having regard to the fact that an insurance contract is in a sense, a commercial contract, having certain terms and conditions and the sub-stratum of the contract cannot be removed by giving a retrospective operation to the amendment. The benefit under Section 80DD of the Act would have been availed by the subscribers at the time when they have subscribed to the policy," the court said.

It also noted that the concerns expressed by Ravi Agrawal, the petitioner in the present writ petition, had been assuaged to a certain extent inasmuch as the Parliament had amended Section 80DD of the Income Tax Act, 1961. 

The said provision deals with payment of annuity of a lump sum amount for the benefit of a dependant, being a person with disability, in the event of death of the individual or the member of a Hindu Undivided Family (HUF) in whose name the subscription to the scheme stipulated in the said provision has been made.

By virtue of the Finance Act, 2022, Section 80DD was amended with effect from April 01, 2023.

The counsel for the petitioner submitted that after the top court's order in the case of Ravi Agrawal Vs Union of India on January 03, 2019 and the observations made therein, the Parliament amended Section 80DD of the Act in terms of Section 21 of the Finance Act, 2022. 

Consequently, on attaining the age of 60 years or more by an individual subscriber or a member of an HUF, the payment or deposit to the scheme envisaged under Section 80DD can be discontinued and the monetary benefit which would have accumulated can be made use of, he said.

The counsel submitted that the said amendment ought to be made retrospective as the same is with effect from April 01, 2023 to the existing policies as it will benefit a large number of subscribers who are interested in making use of the benefit of such policies for the benefit of the disabled persons on turning 60 years of age. 

"That an option could be reserved to the subscribers to have the benefit of the amendment in respect of policies which were made much prior to 2014 as in the said year such policies have been discontinued," he said.

He contended that if the amendment is given a retrospective effect, many subscribers as well as disabled persons would benefit.

On the opposite, the counsel appearing for the respondent, Union government, and others contended that Section 80DD refers to a situation where the benefit of the policy would be provided to a disabled person only on the death or demise of the caregiver or the subscriber. 

The event at which the benefit of the policy would be given to the disabled person is on the death of the subscriber. It is only then the policy would come to an end and the monetary benefit would be given to the disabled person, they said.

They highlighted that the terms and conditions of the policy were crafted with a specific purpose in mind. Notably, following the court's order on January 03, 2019, a clause was added under Section 80DD in response to concerns raised by the same petitioner in a previous writ petition, leading to the amendment.

"But it is too farfetched for the petitioner to seek retrospective operation of the said amendment to the existing policies," they said.

The counsel also contended that the terms of the policies cannot be changed subsequent to their crystallization and the premiums being paid on the said terms. Therefore, there can be no retrospective operation of the amendments, they asserted.

"We have considered the submissions advanced at the Bar in light of the object of Section 80DD and the fact that pursuant to the order of this court, the Parliament has taken note of the observations made in the said order and has amended Section 80DD. We find it difficult to accept the plea made by the counsel for the petitioner to the effect that the said amendment be applied retrospectively to policies which were taken prior to 2014 so that the benefit of the amendment is given to those subscribers also. The reasons are not far to see," the bench said.

The court also pointed out that the whole object of the Jeevan Adhar Policy is to benefit disabled persons by making provisions by the subscriber post his demise. 

"The concern and apprehension of a caregiver or subscriber of a policy for a disabled family member or other person for whose benefit the policy is taken after the demise of the caregiver is of utmost significance. It is only with that object that the caregiver or a subscriber would take such a policy so that he would not leave a disabled person in the lurch on his demise. If that is the object of the policy then we do not think the subscriber or the caregiver of the subscriber should be given the liberty to discontinue the policy during his lifetime on attaining 60 years of age. That would only go against the object with which the policy has been taken and against the interest of the beneficiary, namely, a disabled person," the bench said.

The court also considered the Proclamation on the Full Participation and Equality of the People with Disabilities in the Asian and Pacific Region, 1992; and the subsequent enactments, namely, the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 which has been substituted by the Rights of Persons with Disabilities Act, 2016, as well as the Convention on the Rights of Persons with Disabilities and Optional Protocol 2006; and, the provisions of the Life Insurance Corporation Act, 1956, in this regard.

Case Title: Ravi Agrawal Vs Union of India