RAVI AGRAWAL versus UNION OF INDIA AND ANOTHER on 3 January 2019

8

SUPREME COURT REPORTS[2019] 1 S.C.R. 8

[2019] 1 S.C.R.

A

RAVI AGRAWAL

v.

UNION OF INDIA AND ANOTHER

(Writ Petition (Civil) No. 1107 of 2017)

B

JANUARY 03, 2019

[A. K. SIKRI, ASHOK BHUSHAN ANDS. ABDUL NAZEER, JJ.]

Income Tax Act, 1961 – s.80DD – s.80DD provides forincentive to the persons whose dependents are persons with disabilityC– In order to give effect to the said special provision, LIC floatedinsurance policy named ‘Jeevan Aadhar’ for the benefit ofhandicapped dependents – Petition filed in the interest ofhandicapped children whose parents have taken Jeevan AadharPolicy (Table 114) of the LIC for the livelihood of their children –DGrievance of petitioner pertained to Circular No. CO/CRM/PS/622/23 dated January 24, 2008 issued by the Income Tax Departmentwhich provided that no benefit can be paid to dependent till theproposer/life assured survives – Prayer of petitioner was that byincorporating such a provision, the respondents are denying thebenefit of the insurance to the handicapped persons to get annuityEor lumpsum amount during the lifetime of the parent/guardian ofsuch a handicapped person, whereas the beneficiaries of other lifeinsurance policy are getting annuity during the lifetime of the personwho has taken insurance policy and this violated the fundamentalright of equality of the handicapped person enshrined in Art.14 ofthe Constitution – Prayer of petitioner was to suitably amend s.80DDFof the Act – Held: The purpose of enacting s.80DD is to secure thefuture of the persons suffering from disability, namely, after thedeath of the parent/guardian – s.80DD provides condition thatamount/annuity under the policy is to be released only after thedeath of the person assured – This is the legislative mandate – ThisGCourt cannot give a direction to the Parliament to amend or make astatutory provision in a specified manner – The Court can onlydetermine, in exercise of its power of judicial review, as to whethersuch a provision passes the muster of the Constitutional Scheme –Respondents successfully demonstrated that the main provision wasbased on reasonable classification, which has a valid rationalH

behind it and there is a specific objective sought to be achievedthereby – Although the petitioner may be justified in pointing outthat there could be harsh cases where handicapped persons mayneed the payment on annuity or lumpsum basis even during thelifetime of their parents/guardians, however, it is for the Legislatureto take care of these aspects and to provide suitable provision bymaking necessary amendments in s.80DD – Respondent No.1 torelook into this provision by taking into consideration all the aspectsand explore the possibility of making suitable amendments – Writpetition disposed of – Social Justice – Disability – PIL – Constitutionof India – Art.14.

Disposing of the Writ Petition, the Court HELD: 1. Section 80DD of the Act is a provision made bythe Parliament under the Act in order to give incentive to thepersons whose dependents are persons with disability. Incentiveis to give such persons concessions in income tax by allowingdeductions of the amount specified in Section 80DD of the Act incase such parents/guardians of dependents with disability takeinsurance policies of the nature specified in this provision.Purpose is to encourage these parents/guardians to make regularpayments for the benefit of dependents with disability. In thatsense, the Legislature, in its wisdom thought it appropriate toallow deductions in respect of such contribution made by theparent/guardian in the form of premium paid in respect of suchinsurance policies. Of course, this deduction is admissible onlywhen conditions stipulated therein are satisfied. [Para 15][20-F-H]

2.1 Insofar as insurance policy in question is concerned, itincorporates a condition to the effect that the amount shall notbe given to the handicapped persons during the lifetime of theparent/guardian/life assured. This is in conformity with Section80DD(2)(b) of the Act. To some extent, the grievance of thepetitioner may be justified in this behalf in the plea that whenthere is a need to get these funds even for the benefit ofhandicapped persons, that will not be given to such a person onlybecause of the reason that the assured who is a parent/guardianis still alive. This would happen even when the entire premiumtowards the said policy has been paid. The policy does not have AB

C

DE

F

GH

Amaturity claim. Thus, after making the entire premium for numberof years, i.e. during the duration of the policy, the amount wouldstill remain with the LIC. That may be so. However, the purposebehind such a policy is altogether different. As noted from theprovisions of Section 80DD as well as from the explanatorymemorandum of the Finance Bill, 1998, by which this provisionBwas added, the purpose is to secure the future of the personssuffering from disability, namely, after the death of the parent/guardian. The presumption is that during his/her lifetime, theparent/guardian would take care of his/her handicapped child.Further, such a benefit of deduction from income for the purposesCof tax is admissible subject to the conditions mentioned in Section80DD of the Act. The Legislature has provided the conditionthat amount/annuity under the policy is to be released only afterthe death of the person assured. This is the legislative mandate.There is no challenge to this provision. [Paras 16, 17, 18][21-A-F]DS.K. Dutta, Income Tax Officer v. Lawrence Singh Ingty[1968] 2 SCR 165 – followed.

State of U.P. and Another v. Kamla Palace (2000) 1SCC 557 : [1999] 5 Suppl. SCR 452; State of A.P. andEOthers v. Nallamilli Rami Reddi and Others (2001) 7SCC 708 : [2001] 2 Suppl. SCR 287– relied on.

2. The petitioner may be justified in pointing out that therecould be harsh cases where handicapped persons may need thepayment on annuity or lumpsum basis even during the lifetime ofFtheir parents/guardians. For example, where guardian has becomevery old but is still alive, though he is not able to earn any longeror he may be a person who was in service and has retired fromthe said service and is not having any source of income. In suchcases, it may be difficult for such a parent/guardian to take careof the medical needs of his/her disabled child. Even when he/sheGhas paid full premium, the handicapped person is not able toreceive any annuity only because the parent/guardian of suchhandicapped person is still alive. There may be many other suchsituations. However, it is for the Legislature to take care of theseaspects and to provide suitable provision by making necessaryHamendments in Section 80DD of the Act. In fact, the Chief Commissioner for Persons with Disabilities has also felt that likeother police holders, Jeevan Aadhar policy should also be allowedto mature after 55 years of age of the proposer and the annuityamount should be disbursed through the LLCs or National Trust.Respondent No.1 should relook into this provision by taking intoconsideration all the aspects, including those highlighted by theCourt in this judgment, and explore the possibility of makingsuitable amendments. [Paras 22, 23][23-E-H; 24-A-B]

Case Law Reference

CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil)No. 1107 of 2017.

Under Article 32 of the Constitution of India.

Vikramjit Banerjee, ASG, Prashant Singh, Merusagar Samantray,Rohit Rao, Leetesh Krishna, Ms. Anil Katiyar, R. Chandrachud, KaranSharmaa, Nitin Thukral, Advs. for the Respondents.

Petitioner-in-person.

The Judgment of the Court was delivered by

A. K. SIKRI, J. 1. This writ petition is filed by the petitioner,Ravi Agrawal, under Article 32 of the Constitution of India as a PublicInterest Litigation. The petition is stated to be filed in the interest ofhandicapped 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 adifferently abled person as he is suffering from Cerebral Dysphagia.The petitioner also is an income tax assessee whose Permanent AccountNumber (PAN) issued by the Income Tax Department is [REDACTED].He has stated that he has no personal interest in the subject matterraised in this petition which he has filed on behalf of the handicappedchildren.

2. Section 80DD of the Income Tax Act, 1961 (hereinafter referredto as the ‘Act’) provides for payment of annuity of lump sum amount for A

B

C

D

E

F

G

H

Athe benefit of a dependant, being a person with disability, in the event ofthe death of the individual or the member of the Hindu Undivided Family(HUF) in whose name subscription to the scheme stipulated in the saidprovision has been made. Though it is a long provision, for our purposesit would be suffice to reproduce sub-sections (1), (2) and (3) thereof,which are as under:B

“80DD. Deduction in respect of maintenance includingmedical treatment of a dependant who is a person withdisability.— (1) Where an assessee, being an individual or a Hinduundivided family, who is a resident in India, has, during the previousyear,—

C

(a) incurred any expenditure for the medical treatment (includingnursing), training and rehabilitation of a dependant, being a personwith disability; or (b) paid or deposited any amount under a scheme framed in thisDbehalf by the Life Insurance Corporation or any other insurer orthe Administrator or the specified company subject to the conditionsspecified in sub-section (2) and approved by the Board in thisbehalf for the maintenance of a dependant, being a person withdisability, the assessee shall, in accordance with and subject tothe provisions of this section, be allowed a deduction of a sum ofEseventy-five thousand rupees from his gross total income in respectof the previous year:

Provided that where such dependant is a person with severedisability, the provisions of this sub-section shall have effect as iffor the words “seventy-five thousand rupees”, the words “oneFhundred and twenty-five thousand rupees” had been substituted.

(2) The deduction under clause (b) of sub-section (1) shall beallowed only if the following conditions are fulfilled, namely:—

(a) the scheme referred to in clause (b) of sub-section (1)provides for payment of annuity or lump sum amount forthe benefit of a dependant, being a person with disability,in the event of the death of the individual or the member ofthe Hindu undivided family in whose name subscription tothe scheme has been made; G

(b) the assessee nominates either the dependant, being a personwith disability, or any other person or a trust to receive the paymenton his behalf, for the benefit of the dependant, being a personwith disability.

(3) If the dependant, being a person with disability, predeceasesthe individual or the member of the Hindu undivided family referredto in sub-section (2), an amount equal to the amount paid ordeposited under clause (b) of sub-section (1) shall be deemed tobe the income of the assessee of the previous year in which suchamount is received by the assessee and shall accordingly bechargeable to tax as the income of that previous year.”

3. As per clause (b) of sub-section (1), if an assessee, being anindividual or a HUF, has paid or deposited any amount under the schemeframed in this behalf by the LIC or any other insurer etc., such an assesseeis entitled to deduction of a sum of Rs.75,000/- from his Gross TotalIncome in respect of the previous year. It is subject to the conditionswhich are specified in sub-section (2) of Section 80DD. We areconcerned with the condition mentioned in clause (a) of sub-section (2).As per this condition, disabled dependant would get annuity or lumpsumpayment in the event of death of the individual or the death of the memberof the HUF, in whose name subscription to the scheme has been made.In order to give effect to the aforesaid special provision meant for thebenefit of persons with disability, LIC has floated insurance policy named‘Jeevan Aadhar (Table 114)’ for the benefit of the handicappeddependants. Accordingly, those assessees who get the Jeevan Aadharpolicy for the benefit of handicapped dependants and pay or deposit theamount under the said policy become entitled to the deduction mentionedin Section 80DD of the Act. Synopsis of the said policy introduced bythe LIC gives a glimpse of the salient features of this plan and is, thus,reproduced below:

“A) Synopsis of Plan

1) Age at entry (life assured) – Minimum 22 years, Maximum 65years.

(handicapped dependant – 1 year)

The age of the life assured and handicapped dependant arerequired to be admitted on the basis of standard age proof.

A

B

C

DE

F

G

H

A

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.

B

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.

C

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.

D

10) All female categories i.e. I, II, III are alloewd.

11) Only NMS is allowed, not NMG.

12) Besides proposal form No. 3000, the life assured (proposer)will be required to submit an addendum declaring the disability ofEthe handicapped dependant and a certificate stating thathandicapped dependant is suffering from a permanent physicaldisability (including blindness) or having mental retardatoin as perrules A physician, a surgeon, an oculist or a psychiatrist workingin Govt hospital should clearly state that due to disability suchFperson’s capacity for normal work or engaging in a gainfulemployment or occupation is considerably reduced.”

4. The grievance of the petitioner pertains to Circular No. CO/CRM/PS/622/23 dated January 24, 2008 which is issued by the IncomeTax Department. As per this Circular, no benefit can be paid to thedependant till the proposer/life assured survives. Relevant portion ofGthis Circular is extracted below:

“Representations were received for allowing annuity paymentsfor the disabled dependant before death of parents/life assuredafter a certain age. But CBDT/Govt. Of India have refused to H

do so. Hence it is clarified that no benefit can be paid to dependanttill the proposer/life assured survives.”

5. The Jeevan Aadhar plan also mentions the aforesaid Circularon the basis of which clause pertaining to maturity claim in the policy ismentioned as under:

“F. MATURITY CLAIM

1) IN FORCE POLICY OR FULLY PAID UP POLICY

Policy does not have maturity claim. The provisions of maturityclaim under whole life policies i.e. after completing the age of 80years by life assured: is not applicable under this policy.

Representations were received for allowing annuity payments forthe disabled dependant before death of parents/life assured aftercertain age. But CBDT/Govt. Of India have refused to do so.Hence it is clarified that no benefit can be paid to dependant tillthe proposer/life assured survives. (co/crm/ps/622/23 dated 24/01/2008).”

It is, thus, clear that even when the entire subscription is paidunder this policy meant for handicapped persons, this policy does nothave maturity claim. The amount is payable to the dependant only onthe demise of the proposer/life assured.

6. Submission of the petitioner is that by incorporating such aprovision, the respondents are denying the benefit of the insurance tothe handicapped persons to get annuity or lumpsum amount during thelifetime of the parent/guardian of such a handicapped person, whereasthe beneficiaries of other life insurance policy are getting annuity duringthe lifetime of the person who has taken insurance policy. This, accordingto the petitioner, violates the fundamental right of equality of thehandicapped person enshrined in Article 14 of the Constitution.

7. The petitioner states that he had lodged a complaint before theInsurance Regulatory and Development Authority of India (IRDA) onAugust 06, 2014. However, the said Authority in its reply expressed itsinability to provide any help having regard to the afore-mentioned Circulardated January 24, 2008 of the CBDT. The petitioner even approachedthe Court of the Chief Commissioner for Persons with Disabilities raisingthe aforesaid grievance. The Chief Commissioner heard the matter on A

B

C

D

E

F

G

H

Avarious dates and passed the order advising the CBDT to once againexamine the matter in consultation with the Department of Empowermentof Persons with Disabilities, Ministry of Social Justice and Empowerment,as well as National Trust. Relevant portion thereof reads as under:

“11. During the hearing on 10.03.2015, it was observed thatCentral Board of Direct Taxes (CBDT) had already made thesubmission that the issue of allowing for annuity payment to thedependant with disability under Jeevan Aadhar Policy to commenceafter certain age of a subscriber at 55, 58 or 60 years wasconsidered during the budgetary exercise for 2007-08 and thesame was not found to be acceptable.

B

C

12. In the light of the mandate of the Chief Commissioner forPersons with Disabilities, no direction can be given to CBDT orLIC as there is no allegation of non implementation of the statedpolicy or its terms & conditions. It is, however, the view of thisoffice that Jeevan Aadhar is not the only LIC Policy that givesthe benefit of Income Tax exemption and only a few parents ofpersons with disabilities may be tax payers to be able to avail thetax exemption, such a well intentioned policy should not be linkedto such benefits as tax exemption. As the primary objective ofthe policy is to benefit a person with disability, he/she should startgetting the annuity as early as possible in his/her lifetime.

D

E

D

E

13. With regard to the allegation of the complainant in Case No.2602/1093/2014 that the LIC Agents and professionals told him atthe time of selling the policy that his child would start getting pension@ Rs.2000/- per month for every one lakh of insured amount isFconcerned, LIC is advised to investigate the matter and intimatethe outcome to the complainant under intimation to this Court withintwo months from the date of receipt of these Record ofproceedings. In case it is established that it is a case of mis-selling, then LIC is advised to suitably compensate the complainant.

14. As National Trust was not represented during the hearingdespite the notice and it has suggested that insured amount shouldbe disbursed to the beneficiaries through its LICs, National rust isdirected to get in touch with the LIC and obtain the details of theJeevan Aadhar Policy holders. After obtaining the consent of thepolicy holders for distribution of annuity through LLCs National G

H

Trust shall inform LIC for making National Trust as the nominee/Trusty for receiving the amount of annuity in respect of such policyholders on the terms & conditions as may be finalized betweenLIC and National Trust and ensure that a mechanism is put inplace to disburse the amount of annuity to the disabled dependantsof the policy holders till the dependant is alive.

15. Both the complainants strongly felt that like other policy holders,Jeevan Aadhar Policy should also be allowed to mature after 55years of age of proposer and the annuity amount should bedisbursed through the LICs of National Trust.

16. In the light of the demand of the complainants, CBDT isadvised to once again examine the matter in consultation withDepartment of Empowerment of Persons with Disabilities, Ministryof Social Justice & Empowerment and National Trust.”

8. The Chief Commissioner had even sent reminder thereof tothe CBDT to look into the matter. However, nothing moved at the levelof the CBDT. In fact, the petitioner thereafter lodged his grievancewith the Prime Minister’s Office through Centralised Public GrievanceRedressal and Monitoring System Portal on October 15, 2015. As hedid not receive any response, it provoked the petitioner to file the instantwrit petition with the following prayers:

“(a) Issue a writ of Mandamus or any other appropriate writ,order of direction to Respondents No 1 to amend Section 80DDof the Income Tax Act to allow for the payment of annuity orlump sum amount to a person with disability on attaining the ageof 55/58 years by the guardian/parent of disabled person, in additionto 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 ofJeevan Aadhar Policy (Table 114) to allow for the payment ofannuity or lump sum amount to a person with disability on attainingthe 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 lumpsum amount to a person with disability, the guardian/parents of A

B

C

D

E

F

G

H

A

whom already attained the age of 55/58 or will attend the age of55/58 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 arrangementfor the payment of an annuity/pension to the handicappeddependant after the death of the guardian, without any furtherformality 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 payingterm of the policy and a certificate should be issued by the LIC tothe effect that all the formalities for the payment of annuity/pensionhas been completed, except filing of death certificate of parents/guardian. This issuing of the certificate should be conclusive prooffor releasing of annuity/pension, pending till filing of death certificateof parents/guardian.

B

C

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

9. In essence, the grievance of the petitioner is that benefit ofJeevan 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 thedisabled person even during the lifetime of the assessee.

E

10. Union of India has filed its affidavit giving justification for theaforesaid course of action. In this regard, it is submitted that vide FinanceAct (No.2), 1998, Section 80DD was substituted for Sections 80DDand 80DDA. The earlier Section 80DD provided for a deduction ofRs.15,000/- to an individual or HUF on account of any expenditureincurred for the medical treatment (including nursing), training andrehabilitation of a dependant relative of an individual or member of HUF.The substitution was done to provide for composite Section in respect ofdeduction for expenditure on medical treatment, rehabilitation etc. andfor payment made under a scheme of LIC or any other insurer for thedependant disabled person. Submission is that in effect Section 80DDamalgamates the provisions of the two sections, namely, 80DD and80DDA. Thus, both erstwhile Section 80DDA and present Section 80DDprovide that the annuity or lump sum amount for the benefit of thedependant who is a person with disability will be disbursed only after thedeath of the subscriber. Jeevan Aadhar scheme of LIC has been F

G

H

designed keeping in mind the tax benefits under Section 80DDA/80DDof the Act.

11. It is also submitted by respondent No.1/Union of India that theaforesaid provision was specifically provided for in the Act keeping inview the fact that the guardians of children with disability are alwaysfaced with the grim reality about the need for maintenance of the disabledafter 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 insome special instrument which would ensure payment of a reasonablesum regularly to the disabled on their death. Thus, a separate deductionfrom Gross Total Income of a specified amount deposited in a year inany scheme of LIC or any other insurer specifically framed for providingrecurring or lump sum payment for the maintenance and upkeep of ahandicapped dependant after the death of the assessee and approved bythe CBDT in this behalf was incorporated in the statute. As the schemewas designed to, to a great extent, to assuage the anxiety in the minds ofparents/guardians of handicapped dependants about the destiny of theirwards on their death and, therefore, to allow for annuity payments to thehandicapped dependant under Jeevan Aadhar policy to commence aftera certain age of the subscriber is not possible.

12. Meeting the argument of the petitioner based on Article 14 ofthe Constitution of India, it is argued that the deduction under Section80DD of the Act has been specifically provided for persons with disability.This is a valid classification for providing specific regime for this class ofpersons. The stated objective of the scheme was to assure the parents/guardian of a dependant with disability of regular payment of amount forthe care of such dependant after the death of the parent/guardian.Attention is drawn to the explanatory memorandum relating to FinanceBill, 1998, which is as under:

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

Under the existing provisions of section 80DD, a deduction ofRs.15,000/- is allowed to an individual or Hindu Undivided Familyin respect of expenditure incurred on medical treatment of ahandicapped dependant. Section 80DDA allows for a separatededuction to a parent or guardian in respect of deposits uptoRs.20,000/- made specified schemes of Life Insurance ABC

D

EF

G

H

ACorporation or Unit Trust of India. It has been felt that the parentsor guardian of handicapped dependants may not have to incurexpenditure on medical treatment of a handicapped dependantevery year. However, the parent or the guardian would alwaysfeel the need to provide for the future maintenance of the disableddependant. The existing provisions do not take such situationsBinto account. In order to allow a choice to the parent or theguardian to spend either on the medical treatment of or for thefuture 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/C- for the medical treatment and for future needs of the handicappeddependant in the manner most suited to his needs. The existingsections 80DD and 80DDA would get consequentially mergedwith increase in overall limit of deduction from Rs.35,000 toRs.40,000/-.”

D13. Number of judgments were cited by the learned AdditionalSolicitor General appearing for the Union of India to placate the argumentof discrimination based on Article 14 of the Constitution. Insofar asrespondent No.2/LIC is concerned, its simple answer is that the clausein the policy is as per the prescribed norm approved by the CBDT. Ofcourse, LIC has also supported the reasons given by Union of IndiaEbehind the aforesaid Circular.

14. We have considered the respective submissions.

15. At the outset, it may be observed that Section 80DD of theAct is a provision made by the Parliament under the Act in order to giveFincentive to the persons whose dependants are persons with disability.Incentive is to give such persons concessions in income tax by allowingdeductions of the amount specified in Section 80DD of the Act in casesuch parents/guardians of dependants with disability take insurancepolicies of the nature specified in this provision. Purpose is to encouragethese parents/guardians to make regular payments for the benefit ofGdependants with disability. In that sense, the Legislature, in its wisdomthought it appropriate to allow deductions in respect of such contributionmade by the parent/guardian in the form of premium paid in respect ofsuch insurance policies. Of course, this deduction is admissible onlywhen conditions stipulated therein are satisfied.

H

16. Insofar as insurance policy is concerned, it incorporates acondition (which is impugned in the present writ petition) to the effectthat the amount shall not be given to he handicapped persons during thelifetime of the parent/guardian/life assured. This is in conformity withSection 80DD(2)(b) of the Act.

17. To some extent, the grievance of the petitioner may be justifiedin this behalf in the plea that when there is a need to get these fundseven for the benefit of handicapped persons, that will not be given tosuch a person only because of the reason that the assured who is aparent/guardian is still alive. This would happen even when the entirepremium towards the said policy has been paid. The policy does nothave maturity claim. Thus, after making the entire premium for numberof years, i.e. during the duration of the policy, the amount would stillremain with the LIC. That may be so. However, the purpose behindsuch a policy is altogether different. As noted from the provisions ofSection 80DD as well as from the explanatory memorandum of theFinance Bill, 1998, by which this provision was added, the purpose is tosecure the future of the persons suffering from disability, namely, afterthe death of the parent/guardian. The presumption is that during his/herlifetime, the parent/guardian would take care of his/her handicappedchild.

18. Further, such a benefit of deduction from income for thepurposes of tax is admissible subject to the conditions mentioned in Section80DD of the Act. The Legislature has provided the condition that amount/annuity under the policy is to be released only after the death of theperson assured. This is the legislative mandate. There is no challengeto this provision. The prayer is that Section 80DD of the Act be suitablyamended. This Court cannot give a direction to the Parliament to amendor make a statutory provision in a specified manner. The Court can onlydetermine, in exercise of its power of judicial review, as to whether sucha 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 respondentshave been able to successfully demonstrate that the main provision isbased on reasonable classification, which as a valid rational behind itand there is a specific objective sought to be achieved thereby.

A

BC

D

EF

G

A19. In State of U.P. and Another v. Kamla Palace, (2000) 1SCC 557, this Court, while considering a fiscal statute in relation to Article14 of the Constitution, has stated as under:

“11. Article 14 does not prohibit reasonable classification ofpersons, objects and transactions by the legislature for the purposeBof attaining specific ends. To satisfy the test of permissibleclassification, it must not be “arbitrary, artificial or evasive” butmust be based on some real and substantial distinction bearing ajust and reasonable relation to the object sought to be achieved bythe legislature. (See Special Courts Bill, 1978, Re, seven-JudgeBench; R.K. Garg v. Union of India, five-Judge Bench.) It wasCfurther held in R.K. Garg case that laws relating to economicactivities or those in the field of taxation enjoy a greater latitudethan laws touching civil rights such as freedom of speech, religionetc. Such a legislation may not be struck down merely on accountof crudities and inequities inasmuch as such legislations areDdesigned to take care of complex situations and complex problemswhich do not admit of solutions through any doctrinaire approachor straitjacket formulae...”.

20. Further, in S.K. Dutta, Income Tax Officer v. LawrenceSingh Ingty, (1968) 2 SCR 165, the Constitution Bench of this courtEheld as under:

“8. It is not in dispute that taxation laws must also pass the test ofArticle 14. That has been laid down by this Court in Moopil Nairv. State of Kerala. But as observed by this Court in East IndiaTobacco Co. v. State of Andhra Pradesh, in deciding whether aFtaxation law is discriminatory or not it is necessary to bear in mindthat the State has a wide discretion in selecting persons or objectsit will tax, and that a statute is not open to attack on the groundthat it taxes some persons or objects and not others; it is onlywhen within the range of its selection, the law operates unequally,and that cannot be justified on the basis of any valid classification,Gthat it would be violative of Article 14. It is well settled that aState does not have to tax everything in order to tax something. Itis allowed to pick and choose districts, objects, persons, methodsand even rates for taxation if it does so reasonably.”

21. In State of A.P. and Others v. Nallamilli Rami Reddi andOthers, (2001) 7 SCC 708, this Court held:

“8. What Article 14 of the Constitution prohibits is “classlegislation” and not “classification for purpose of legislation”. Ifthe legislature reasonably classifies persons for legislative purposesso as to bring them under a well-defined class, it is not open tochallenge on the ground of denial of equal treatment that the lawdoes not apply to other persons. The test of permissibleclassification is twofold: (i) that the classification must be foundedon intelligible differentia which distinguishes persons groupedtogether from others who are left out of the group, and (ii) thatdifferentia must have a rational connection to the object sought tobe achieved. Article 14 does not insist upon classification, whichis scientifically perfect or logically complete. A classification wouldbe justified unless it is patently arbitrary. If there is equality anduniformity in each group, the law will not become discriminatory,though due to some fortuitous circumstance arising out of peculiarsituation some included in a class get an advantage over others solong as they are not singled out for special treatment...”

22. The petitioner may be justified in pointing out that there couldbe harsh cases where handicapped persons may need the payment onannuity or lumpsum basis even during the lifetime of their parents/guardians. For example, where guardian has become very old but is stillalive, though he is not able to earn any longer or he may be a person whowas in service and has retired from the said service and is not havingany source of income. In such cases, it may be difficult for such aparent/guardian to take care of the medical needs of his/her disabledchild. Even when he/she has paid full premium, the handicapped personis not able to receive any annuity only because the parent/guardian ofsuch handicapped person is still alive. There may be many other suchsituations. However, it is for the Legislature to take care of these aspectsand to provide suitable provision by making necessary amendments inSection 80DD of the Act. In fact, the Chief Commissioner for Personswith Disabilities has also felt that like other police holders, Jeevan Aadharpolicy should also be allowed to mature after 55 years of age of theproposer and the annuity amount should be disbursed through the LLCsor National Trust.

A

B

C

D

E

F

G

H

A23. In the aforesaid circumstances, we dispose of this writ petitionby urging upon respondent No.1 to have a relook into this provision bytaking into consideration all the aspects, including those highlighted bythe Court in this judgment, and explore the possibility of making suitableamendments.

B

Devika Gujral

Petition disposed of.

C

D

E

F

G

H