The Supreme Court in a case denied giving the retrospective operation to the amended Section 80DD of the Income Tax Act, 1961 (“IT Act”) which furnished an option to the subscriber the Jeevan Adhar Policy (“Policy”) upon reaching the age of 60 years to halt the deposit made under the policy and utilize of the money collected for the benefit of the disabled person for whom the policy was purchased.
It is good to cite that before the revision of section 80DD of the IT Act, the caregiver of the subscriber buying a Jeevan Adhar Policy for the advantage of the disabled dependent on reaching the age of 60 years that does not have the choice to stop the deposit made in the policy and utilize the money collected for the advantage of the disabled dependent since the money can merely be used for the advantage of the disabled individual on the death of the caregiver.
For the concern, a writ petition was filed in the year 2017 where the applicant has emphasized the harsh cases where handicapped individuals may require payment on an annuity or lumpsum grounds in the lifetime of their parents. the Court vide Judgment dated 03.01.2019 acknowledging the concerns of the applicant asked the Union of India to again analyze the same provision by regarding all the facts and probing the feasibility of making the proper revisions.
Read Also: SC Denies to Hear Plea Against 45-Day Payment Rule U/S 43B(h)
As per the appeal of the court, a revision was made to Section 80DD of the IT Act in terms of Section 21 of the Finance Act, 2022. Via a revision on reaching the age 60 years or more of a person subscriber or a member of a HUF, the payment or deposit to the scheme envisaged u/s 80DD can be halted and the monetary benefit that would have been gathered can be utilized.
Through an immediate petition, the petitioner requested the retroactive application of the amendment to Section 80DD of the Income Tax Act for policies established long before 2014, as those policies were discontinued in that year.
Rejecting such a demand, the bench comprising Justices BV Nagarathna and N Kotiswar Singh observed that:
“We find it difficult to accept the plea made by the learned counsel for the petitioner to the effect that the said amendment be applied retrospectively to policies which were taken before 2014 so that the benefit of the amendment is given to those subscribers also. The reasons are not far to see.”, the court said.
The Court stated that applying the amendment retroactively would undermine the fundamental purpose of the Policy, which aims to assist disabled individuals by ensuring they are not left in financial distress upon the caregiver’s death.
The court cited that the whole object of the Jeevan Adhar Policy is to help disabled persons by making provisions for the subscriber after his death. 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 opted post the death of the caregiver is of the greatest significance.
Recommend: Major Changes in Income Tax Rules FY 2023-24, 21-22 & 20-21
It is foremost with that object that the caregiver or a subscriber opts for such a policy so that he would not leave a disabled person in the lurch on his demise. If it is the policy object then we do not consider the subscriber or the caregiver of the subscriber must be provided the liberty to stop the policy in his lifetime on reaching 60 years of age. That would just go against the object with which the policy has been carried and against the interest of the beneficiary, namely, a disabled person.
While the Court acknowledged that subscribers accessed the benefits of Section 80DD of the Act at the time of policy subscription, it asserted that the essential components of a commercial contract cannot be modified retrospectively through amendments.
In summary, the Court stated that the petitioner’s primary concern regarding the use of accumulated funds for the benefit of disabled individuals upon reaching 60 years of age was adequately addressed by the Union of India through the Budget 2022-2023 Finance Act, thus resolving the issues raised by the petitioner, albeit with prospective implications.
| Case Title | Ravi Agrawal Vs. Union of India & Another |
| Citation | Writ Petition (Civil) No.706 of 2020 |
| Date | 20.08.2024 |
| For Petitioner | Mr Partha Sil |
| For Respondent | Mrs Nisha Bagchi, Mr. Kailash Vasdev |
| Supreme Court of India | Read Order |
