Income Tax Act | Supreme Court Refuses To Give Retrospective Application To 2022 Amendment To S.80DD Regarding 'Jeevan Adhar' Policies

In a recent case, the Supreme Court refused to give the retrospective operation to the amended Section 80DD of the Income Tax Act, 1961 (“IT Act”) which provided an option to the subscriber the Jeevan Adhar Policy (“Policy”) upon attaining the age of 60 years to discontinue the deposit made under the policy and make use of the money accumulated for the benefit of the disabled person for whom the policy was purchased.

It is worthwhile to mention that before amended Section 80DD of the IT Act, the caregiver or subscriber purchasing a Jeevan Adhar Policy for the benefit of the disabled dependent upon attaining the age of 60 years doesn't have the option to discontinue the deposit made under the policy and make use of the money accumulated for the benefit of the disabled dependent, as the money could only be used for the benefit of the disabled person on the death of the caregiver.

A Writ Petition was preferred in this regard in the year 2017, where the Petitioner highlighted the harsh cases where handicapped persons may need the payment on an annuity or lumpsum basis even during the lifetime of their parents/guardians. Upon considering the concerns expressed by the Petitioner, the Court vide Judgment dated 03.01.2019 urged the Union of India to relook into this provision by considering all the aspects and exploring the possibility of making suitable amendments.

Acceding to the Court's request, an amendment was carried out to Section 80DD of the IT Act in terms of Section 21 of the Finance Act, 2022. By way of an amendment, on attaining the age of 60 years or more by an individual subscriber or a member of a HUF, the payment or deposit to the scheme envisaged under Section 80DD can be discontinued and the monetary benefit that would have accumulated can be made use of.

By way of an instant petition, the petitioner sought the retrospective operation of the amendment made to Section 80DD of the IT Act regarding policies made much prior to 2014 as in the said year such policies have been discontinued.

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 prior to 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 opined that if the amendment was given a retrospective operation than it would frustrate the very purpose and objective of the Policy which was designed for the benefit of the disabled person so that in the event of the demise of the caregiver they would not be kept in the financial lurch.

“The whole object of Jeevan Adhar Policy is to benefit disabled persons by making provision 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 Court said.

While holding that the benefit under Section 80DD of the Act would have been availed by the subscribers at the time when they subscribed to the policy, the Court also observed that “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.”

In conclusion, the Court said that since the main grievance of the petitioner about the making use of the accumulated money for the benefit of the disabled person upon attainment of the age of 60 years was duly catered by the Union of India via Budget 2022-2023 Finance Act and therefore, “the grievance of the persons like the petitioner had stood addressed though with prospective effect.”

Accordingly, the Writ Petition stands disposed of.

Appearance:

For Petitioner(s) Mr. Partha Sil, AOR Mr. Partha Sil, Amicus Curiae Mr. Tavish Bhushan Prasad, Adv. Ms. Sayani Bhattacharya, Adv. Mr. Abhiraj Chowdhary, Adv. Mr. Anirudh Gupta, Adv. Mr. Chirag Joshi, Adv.

For Respondent(s) Mr. N Venkatraman, A.S.G. Mrs. Nisha Bagchi, Sr. Adv. Mr. Raj Bahadur Yadav, AOR Mrs. Gargi Khanna, Adv. Mr. H R Rao, Adv. Mrs. Vimla Sinha, Adv. Mrs. Ruchi Gaur Narula, Adv. Mr. Shlok Chandra, Adv. Mr. Navanjay Mahapatra, Adv. Mr. Kailash Vasdev, Sr. Adv. Mr. R. Chandrachud, AOR Mr. Dhuli Venkata Krishna, Adv.

Case Title: RAVI AGRAWAL VERSUS UNION OF INDIA & ANOTHER, WRIT PETITION (CIVIL) NO.706 OF 2020

Citation : 2024 LiveLaw (SC) 650

Click here to read/download the order