Court cannot direct State to amend Tax Laws for giving Deductions: Supreme Court [Read Judgment]

Supreme Court Income Tax

A division bench of the Supreme Court has held that the Court does not have the power to direct the Parliament to amend a law or create some legal provision, to a specified effect.

The Bench also held that the mandate of amending certain beneficial provisions under the Income Tax Act vests with the Legislature only and the Court can only persuade the legislature to extend the benefit embedded in such provisions, to a certain class of persons.

A petitioner is a differently-abled person, who filed the present Public Interest Litigation. He represented the interests of handicapped children whose parents availed the Jeevan Aadhar Policy from the LIC, for the livelihood of the children. He drew attention to the provision of the policy, stating that those assessees who obtain the policy for the benefit of handicapped dependents and deposit some amount under the policy are entitled to the deduction of Rs 75000/- from Gross Total Income, u/s 80DD of the I-T Act, 1961.

Before the Court, the petitioner contended that as per the CBDT circular, no benefit can be paid to a dependent till the proposer/life assured survives. In effect, even if the entire subscription is paid, the policy does not have maturity claim. The petitioner, who failed to get any relief from CBDT, requested the Court to give a direction to amend the provisions of Section 80DD.

The bench comprising Justice A K Sikri, Justice Ashok Bhushan and Justice S Abdul Azzez observed that the benefit of deduction from income for the purposes of tax is admissible subject to the conditions mentioned in Section 80DD of the Act.

Also Read: Information that Dummy Concern used to route Unaccounted Money sufficient to Re-open Assessment: Madhya Pradesh High Court 

“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. This Court cannot give a direction to the Parliament to amend or make a statutory provision in a specified manner. The Court can only determine, in an exercise of its power of judicial review, as to whether such a provision passes the muster of the Constitutional Scheme. Though there is no specific prayer in this behalf, in the body of the writ petition, an argument of discrimination is raised. Here, it is found that the respondents have been able to successfully demonstrate that the main provision is based on reasonable classification, which as a valid rationale behind it and there is a specific objective sought to be achieved thereby,” the bench said.

“The petitioner may be justified in pointing out that there could be harsh cases where handicapped persons may need the payment on annuity or lump sum basis even during the lifetime of their parents/guardians………..it is for the Legislature to take care of these aspects and to provide suitable provision by making necessary amendments in Section 80DD of the Act. In fact, the Chief Commissioner for Persons with Disabilities has also felt that like other police holders, Jeevan Aadhar policy should also be allowed to mature after 55 years of age of the proposer and the annuity amount should be disbursed through the LLCs or National Trust. Hence the respondent No.1 is directed to relook into this provision by taking into consideration all the aspects,” the bench added.


To Read the full text of the Judgment CLICK HERE