SC suggest Center for re-look in IT Act for insurance holders disabled dependent

The Supreme Court Thursday suggested that the Centre re-look a provision of the Income Tax Act which says that a disabled dependant would get annuity or lump sum payment only upon the death of the insurance policyholder.

A bench headed by Justice A K Sikri asked the Centre to take into consideration all the aspects, including those where a disabled dependent might need payment on annuity or lump sum basis even during the lifetime of the parents or guardians, and "explore the possibility of making suitable amendments" to section 80 DD of the I-Tax Act.

"The Legislature has provided the condition that amount/ annuity under the policy is to be released only after the death of the person assured. This is the legislative mandate. There is no challenge to this provision. The prayer is that section 80DD of the Act be suitably amended," the bench noted in its verdict. "This Court cannot give a direction to the Parliament to amend or make a statutory provision in a specified manner," said the bench, also comprising Justices Ashok Bhushan and S A Nazeer.

The court delivered the judgement on a plea by Ravi Agrawal, who is a differently-abled person and had said that he filed the petition in the interest of handicapped children whose parents have taken 'Jeevan Aadhar Policy' from the Life Insurance Corporation of India (LIC) for the livelihood of their kids.

Agrawal said he was aggrieved by an I-T Department circular of January 24, 2008, which stated that no benefit could be paid to the disabled dependant till the life assured survives. In its verdict, the bench observed that petitioner may be justified in pointing out that there could be harsh cases where handicapped dependents may need payment on annuity or lump sum basis even during the lifetime of their parents/guardians.

"Even when he/she has paid the full premium, the handicapped person is not able to receive any annuity only because the parent/guardian of such handicapped person is still alive. There may be many other such situations," the bench noted. It also observed that there could be situations when it would be difficult for a parent or guardian to take care of the medical needs of their disabled child.

"For example, where a 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," the bench observed.

"In the aforesaid circumstances, we dispose of this writ petition by urging upon respondent No.1 (Centre) to have a relook into this provision by taking into consideration all the aspects....and explore the possibility of making suitable amendments," the bench said.

(With inputs from agencies.)