Case: Prashanti Medical Services &amp; Research Foundation Vs. Union of India &amp; Ors

28 projects were approved by the Committee by notification dated 07.12.2015 but none of them (27) has come forward to question the constitutional validity of sub¬section (7) except the appellant herein. In other words, out of 28 projects owners whose projects were approved by the Committee by notification dated 07.12.2015, only the appellant herein has felt aggrieved and filed the petition in the High Court 20. Be that as it may, as rightly argued by the learned counsel for the respondent (Revenue), the real aggrieved parties, which should have felt aggrieved by insertion of sub¬section (7) in Section 35AC of the Act, were those assesses, i.e., Donors who despite paying the donation to the appellant were not allowed to claim deduction of the said amount from their total income during the financial year 2017¬2018. 21. In other words, one of the main objects for which Section 35AC was enacted was to allow the assessees to claim deduction of the amount paid by them to the appellant for their project. 22. As mentioned above, none of the assessees (Donee), who claimed to have paid amount to any eligible projects came forward complaining that despite their donating the amount to the appellant for their project, they were denied the benefit of claiming deduction of such amount from their total income by virtue of sub¬section (7) of Section 35AC of the Act during the financial year 2017¬2018. 23. It is not in dispute that the benefit of the deduction available under Section 35AC of the Act was duly availed of by all the assessees for two financial years, namely, 2015¬2016 and 2016¬2017. 24. The dispute is now confined only to third financial year, i.e., 2017-2018 because for this year, the assessees were not allowed to claim deduction of the amount paid by them to the appellant on account of insertion of sub-section(7) in Section 35AC of the Act with effect from 01.04.2017. 25. We are of the view that sub¬section (7) is prospective in its operation and, therefore, all the assessees were rightly allowed to claim deduction of the amount paid by them to eligible projects from their total income during two financial years, namely, 2015¬2016 and 2016¬2017. If sub¬section (7) had been retrospective in its operation then the deduction for 2015¬2016 and 2016¬2017 too would have been disallowed. Admittedly, such is not the case here. 26. As rightly argued by the learned counsel for the respondent (Revenue), a plea of promissory estoppel is not available to an assessee against the exercise of legislative power and nor any vested right accrues to an assessee in the matter of grant of any tax concession to him. In other words, neither the appellant nor the assessee has any right to set up a plea of promissory estoppel against the exercise of legislative power such as the one exercised while inserting sub¬section (7) in Section 35AC of the Act (see¬M/s Motilal Padampat Sugar Mills Co. Ltd.(supra) and other cases relied on by the learned counsel for the respondent¬Revenue). It is more so when we find that this sub¬section was made applicable uniformly to all alike the appellant prospectively. 27. It is not in dispute that now time to donate the amount to eligible projects for claiming deduction from the total income for the year 2017¬2018 has expired. It is now no longer available due to efflux of time. In this view of the matter, even if the appellant received any amount from any assessee for their project, no deduction could be allowed to such assessee either for the period 2017-2018 or for any subsequent period. 28. It was, however, stated by the learned counsel for the appellant that the appellant has received 3.84 crores during the year 2017¬2018 from various assessees. It was also stated that if sub-section(7) had been held not applicable to the appellants project then the appellant would have received much more amount than Rs.3.84 crores during the financial year 2017¬2018, which is clear from the amount received by the appellant in earlier two years prior to insertion of sub¬section(7), i.e., Rs. 10.97 crores during the financial year 2015¬2016 and Rs. 20.55 crores during the financial year 2016¬2017. 29. We find no merit in this submission. In a taxing statute, a plea based on equity or/and hardship is not legally sustainable. The constitutional validity of any provision and especially taxing provision cannot be struck down on such reasoning. 30. Learned counsel for the appellant then urged that having regard to the fact that the appellant has set up a charitable hospital and that they were not able to receive more amount by way of donation for their project in the third financial year 2017¬2018, this Court may consider appropriate to invoke powers under Article 142 of the Constitution and allow the appellant to receive donation even for the third financial year in terms of the notification dated 07.12.2015 from their donors. 31. We are afraid, we cannot accept this submission for more than one reason. First, as held above, in tax matter, neither any equity nor hardship has any role to play while deciding the rights of any taxpayer qua the Revenue; Second, once the action is held in accordance with law and especially in tax matters, the question of invoking powers under Article 142 of the Constitution does not arise; and third, the appellants Donors were admittedly allowed to claim deduction of the amount paid by them to the appellant under Section 35AC during the two financial years 2015¬ 2016 and 2016¬2017. It is for all these reasons, the matter must rest there. 32. Learned counsel for the appellant placed reliance on the decision of S.L. Srinivasa Jute Twine Mills (P) Ltd. (supra), Sangam Spinners (supra) and CIT vs. Vatika Township Pvt. Ltd., (supra). In our view, in the light of the foregoing discussion and the findings recorded, the arguments based on the principle laid down in these decisions cannot be accepted. We, therefore, need not deal with this issue any more.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]17. Having heard the learned counsel for the parties and on perusal of the record of the case, we are not inclined to interfere with the impugned order of the High Court19. It is not in dispute that 28 projects were approved by the Committee by notification dated 07.12.2015 but none of them (27) has come forward to question the constitutional validity of sub¬section (7) except the appellant herein. In other words, out of 28 projects owners whose projects were approved by the Committee by notification dated 07.12.2015, only the appellant herein has felt aggrieved and filed the petition in the High Court20. Be that as it may, as rightly argued by the learned counsel for the respondent (Revenue), the real aggrieved parties, which should have felt aggrieved by insertion of sub¬section (7) in Section 35AC of the Act, were those assesses, i.e., Donors who despite paying the donation to the appellant were not allowed to claim deduction of the said amount from their total income during the financial year 2017¬201821. In other words, one of the main objects for which Section 35AC was enacted was to allow the assessees to claim deduction of the amount paid by them to the appellant for their project22. As mentioned above, none of the assessees (Donee), who claimed to have paid amount to any eligible projects came forward complaining that despite their donating the amount to the appellant for their project, they were denied the benefit of claiming deduction of such amount from their total income by virtue of sub¬section (7) of Section 35AC of the Act during the financial year 2017¬201823. It is not in dispute that the benefit of the deduction available under Section 35AC of the Act was duly availed of by all the assessees for two financial years, namely, 2015¬2016 and 2016¬201725. We are of the view that sub¬section (7) is prospective in its operation and, therefore, all the assessees were rightly allowed to claim deduction of the amount paid by them to eligible projects from their total income during two financial years, namely, 2015¬2016 and 2016¬2017. If sub¬section (7) had been retrospective in its operation then the deduction for 2015¬2016 and 2016¬2017 too would have been disallowed. Admittedly, such is not the case here26. As rightly argued by the learned counsel for the respondent (Revenue), a plea of promissory estoppel is not available to an assessee against the exercise of legislative power and nor any vested right accrues to an assessee in the matter of grant of any tax concession to him. In other words, neither the appellant nor the assessee has any right to set up a plea of promissory estoppel against the exercise of legislative power such as the one exercised while inserting sub¬section (7) in Section 35AC of the Act (see¬M/s Motilal Padampat Sugar Mills Co. Ltd.(supra) and other cases relied on by the learned counsel for the respondent¬Revenue). It is more so when we find that this sub¬section was made applicable uniformly to all alike the appellant prospectively27. It is not in dispute that now time to donate the amount to eligible projects for claiming deduction from the total income for the year 2017¬2018 has expired. It is now no longer available due to efflux of time. In this view of the matter, even if the appellant received any amount from any assessee for their project, no deduction could be allowed to such assessee either for the period 2017-2018 or for any subsequent period28. It was, however, stated by the learned counsel for the appellant that the appellant has received 3.84 crores during the year 2017¬2018 from various assessees. It was also stated that if sub-section(7) had been held not applicable to the appellants project then the appellant would have received much more amount than Rs.3.84 crores during the financial year 2017¬2018, which is clear from the amount received by the appellant in earlier two years prior to insertion of sub¬section(7), i.e., Rs. 10.97 crores during the financial year 2015¬2016 and Rs. 20.55 crores during the financial year 2016¬201729. We find no merit in this submission. In a taxing statute, a plea based on equity or/and hardship is not legally sustainable. The constitutional validity of any provision and especially taxing provision cannot be struck down on such reasoning30. Learned counsel for the appellant then urged that having regard to the fact that the appellant has set up a charitable hospital and that they were not able to receive more amount by way of donation for their project in the third financial year 2017¬2018, this Court may consider appropriate to invoke powers under Article 142 of the Constitution and allow the appellant to receive donation even for the third financial year in terms of the notification dated 07.12.2015 from their donors31. We are afraid, we cannot accept this submission for more than one reason. First, as held above, in tax matter, neither any equity nor hardship has any role to play while deciding the rights of any taxpayer qua the Revenue; Second, once the action is held in accordance with law and especially in tax matters, the question of invoking powers under Article 142 of the Constitution does not arise; and third, the appellants Donors were admittedly allowed to claim deduction of the amount paid by them to the appellant under Section 35AC during the two financial years 2015¬ 2016 and 2016¬2017. It is for all these reasons, the matter must rest there32. Learned counsel for the appellant placed reliance on the decision of S.L. Srinivasa Jute Twine Mills (P) Ltd. (supra), Sangam Spinners (supra) and CIT vs. Vatika Township Pvt. Ltd., (supra). In our view, in the light of the foregoing discussion and the findings recorded, the arguments based on the principle laid down in these decisions cannot be accepted. We, therefore, need not deal with this issue any more.