IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. 5849 OF 2019 (Arising out of S.L.P.(C) No.34287 of 2017) Prashanti Medical Services & Research Foundation .Appellant(s) VERSUS Union of India & Ors. .Respondent(s) JUDGMENT Abhay Manohar Sapre, J. 1. Leave granted. 2. This appeal is filed against final judgment Signature Not Verified and order dated 14.09.2017 passed by High Digitally signed by ANITA MALHOTRA Date: 2019.07.25 17:04:58 IST Reason: Court of Gujarat at Ahmedabad in SCA No.7558 of 1 2017 whereby High Court dismissed petition filed by appellant herein. 3. few facts need mention hereinbelow for disposal of this appeal, which involves short point. 4. appellant herein is petitioner and respondents herein are respondents in petition out of which this appeal arises. 5. appellant is Charitable Trust registered under provisions of Bombay Public Trust Act, 1950. appellant has set up Heart Hospital in Ahmadabad. commencement of project of appellant's hospital began in year 2014 (05.05.2014). 6. On 27.09.2014, appellant filed application under Section 35AC of Income Tax Act, 1961 (hereinafter referred to as "the Act) to National Committee for Promotion of Social and Economic Welfare, Department of Revenue, North 2 Block, New Delhi (hereinafter referred to as Committee") for grant of approval to their hospital project as specified in Section 35AC of Act so as to enable any "assessee" to incur expenditure by way of making payment of any amount to appellant for construction of their approved hospital project and accordingly claim appropriate deduction of such payment from his total income during previous year. Like appellant, several persons, as specified in Section 35AC of Act, also made applications to Committee for grant of approval to their hospital projects. 7. notification was issued by Government of India on 07.12.2015 mentioning therein that Committee has approved 28 projects as "eligible projects" under Section 35AC of Act. name of appellant appears at serial No. 10 in 3 notification dated 07.12.2015. It reads as under: S.No. Name of Project or Maximum Institution scheme and amount of estimated cost to be cost thereof allowed as deduction under Section 35AC and period of approval 10. Prashanti Prashanti Medical Medical Committee Research Services & recommended Foundation, Reasearch approval for Sri Satya Sai Foundation, project at Heart Ahmedabad estimated Hospital, RS.250.00 cost of Kashindra Crore Rs.250.00 Village, crore for Ahmedabad three financial Dholka years Road(Gujarat) commencing with financial year, 2015 16,i.e., 2015 16, 2016 17 and 2017 18 8. According to appellant, they received amount by way of donation from several assesses during years 2015 2016 and 2016 2017. These assesses then claimed deduction of amount, which they had donated to appellant for their hospital project, from their total income. As per 4 appellant, they received donations in three financial years from several assesses for their hospital project as detailed below: Financial Rs. year 2015 16 10.97 crores 2016 17 20.55 crores 2017 18 3.84 crores 9. benefit of claiming deduction was, however, discontinued from assessment year 2018 2019 by insertion of sub section(7) in Section 35AC of Act by Finance Act, 2016 with effect from 01.04.2017. 10. It is this insertion of sub section(7) in Section 35AC of Act, which gave rise to filing of petition by appellant in Gujarat High Court. appellant in petition questioned constitutional validity of sub section(7) of Section 35AC of Act inter alia on ground that once 5 Committee granted approval to appellant's hospital project for period of three financial years, same could not be withdrawn qua appellant on strength of insertion of sub section (7) in Section 35AC of Act. In other words, challenge was on ground that sub section (7) of Section 35AC is essentially prospective in nature and, therefore, it will have no application to those projects which were approved by Committee prior to insertion of sub section(7), i.e., 01.04.2017. challenge was also on ground that Revenue cannot apply sub section (7) retrospectively and withdraw benefits, whether fully or partially, which were approved to appellant. It was, therefore, contended that appellant and assessees should be held entitled to avail of full benefit for three financial years in terms of notification dated 07.12.2015. 6 11. respondent (Revenue) supported insertion of sub section (7) in Section 35AC and inter alia contended that, firstly, insertion of sub section (7) is prospective in nature; secondly, it operates qua every person alike appellant irrespective of approval granted by Committee; Thirdly, sub section (7), in clear terms, provides discontinuance of deduction only from assessment year 2018 2019 onwards; Fourthly, this intention of legislature is clear from perusal of budget speech of Minister of Finance, notes on clauses and memorandum explaining amended provisions in Finance Bill, 2016; Fifthly, appellant not being assessee under Section 35AC of Act has no locus to raise issue in question and nor they are, in any way, affected due to insertion of sub section (7); Sixthly, appellant neither has any vested right in such matters nor 7 has any right to set up plea of promissory estoppel against exercise of any legislative power such as one exercised by Parliament while inserting sub section(7); and lastly, appellant has already received substantial donations from several assessees for their hospital project during two financial years (2015 2016 and 2016 2017) and, therefore, there is neither any hardship nor any prejudice caused to appellant due to insertion of sub section (7) in Section 35AC of Act. 12. High Court, in impugned order, repelled challenge and while upholding pleas raised by respondent(Revenue) dismissed appellant's petition, which has given rise to filing of this appeal by appellant after obtaining special leave from this Court. 13. Heard Mr. Arvind Datar, learned senior counsel for appellant and Mr. K. 8 Radhakrishnan, learned senior counsel for respondents. 14. Mr. Arvind Datar, learned senior counsel appearing for appellant reiterated aforementioned submissions, which were urged in High Court, and while elaborating contended that appellant so also assesses, who made payment to appellant in financial year 2017 2018 should have been allowed to claim deduction during financial year 2017 2018 (Assessment Year 2018 2019) also notwithstanding insertion of sub section (7) in Section 35AC of Act with effect from 01.04.2017. 15. In support of his submissions, learned counsel placed reliance on decisions of this Court in S.L. Srinivasa Jute Twine Mills (P) Ltd. vs. Union of India & Anr., (2006) 2 SCC 740, Sangam Spinners 9 vs. Regional Provident Fund Commissioner I, (2008) 1 SCC 391 and Commissioner of Income Tax(Central) I, New Delhi vs. Vatika Township Pvt. Ltd., (2015) 1 SCC 1. 16. In reply, learned counsel for respondent (Revenue) supported reasoning and conclusion arrived at by High Court and prayed for dismissal of appeal. Learned counsel placed reliance on decisions in State of Kerala & Anr. vs. Gwalior Rayon Silk Manufacturing (WVG.) Co. Ltd. Etc., (1973) 2 SCC 713, Motilal Padampat Sugar Mills Co. Ltd. vs. State of U.P. & Ors., (1979) 2 SCC 409, R.K. Garg vs. Union of India & Ors., (1981) 4 SCC 675, Kasinka Trading & Anr. vs. Union of India & Anr., (1995) 1 SCC 274, Bannari Amman Sugars Ltd. vs. Commercial Tax Officer & Ors., (2005) 1 SCC 625, Shree Sidhbali 10 Steels Ltd. & Ors. vs. State of U.P. & Ors., (2011) 3 SCC 193, Bajaj Hindustan Ltd. vs. Sir Shadi Lal Enterprises Ltd. & Anr., (2011) 1 SCC 640 and Kothari Industrial Corporation Ltd. vs. Tamil Nadu Electricity Board & Anr., (2016) 4 SCC 134. 17. Having heard learned counsel for parties and on perusal of record of case, we are not inclined to interfere with impugned order of High Court. 18. Section 35AC was inserted in Act with effect from 01.04.1992 whereas sub section (7), which is subject matter of this appeal, was inserted in Section 35AC with effect from 01.04.2017, which reads as under: 35AC. (1) Where assessee incurs any expenditure by way of payment of any sum to public sector company or local authority or to association or institution approved by National Committee for carrying out any eligible project or scheme, assessee 11 shall, subject to provisions of this section, be allowed deduction of amount of such expenditure incurred during previous year : Provided that company may, for claiming deduction under this sub section, incur expenditure either by way of payment of any sum as aforesaid or directly on eligible project or scheme. (2) deduction under sub section (1) shall not be allowed unless assessee furnishes along with his return of income certificate (a) where payment is to public sector company or local authority or association or institution referred to in sub section (1), from such public sector company or local authority or, as case may be, association or institution; (b) in any other case, from accountant, as defined in Explanation below sub section (2) of section 288, in such form, manner and containing such particulars (including particulars relating to progress in work relating to eligible project or scheme during previous year) as may be prescribed. Explanation. deduction, to which assessee is entitled in respect of any sum paid to public sector company or local authority or to association or institution for carrying out eligible project or scheme referred to in this section applies, shall not be denied merely on ground 12 that subsequent to payment of such sum by assessee, (a) approval granted to such association or institution has been withdrawn; or (b) notification notifying eligible project or scheme carried out by public sector company or local authority or association or institution has been withdrawn. (3) Where deduction under this section is claimed and allowed for any assessment year in respect of any expenditure referred to in sub section (1), deduction shall not be allowed in respect of such expenditure under any other provision of this Act for same or any other assessment year. (4) Where association or institution is approved by National Committee under sub section (1), and subsequently (i) that Committee is satisfied that project or scheme is not being carried on in accordance with all or any of conditions subject to which approval was granted; or (ii) such association or institution, to which approval has been granted, has not furnished to National Committee, after end of each financial year, report in such form and setting forth such particulars and within such time as may be prescribed, National Committee may, at any time, after giving reasonable opportunity of showing cause against proposed withdrawal to concerned association or institution, withdraw approval: 13 Provided that copy of order withdrawing approval shall be forwarded by National Committee to Assessing Officer having jurisdiction over concerned association or institution. (5) Where any project or scheme has been notified as eligible project or scheme under clause (b) of Explanation, and subsequently (i) National Committee is satisfied that project or scheme is not being carried on in accordance with all or any of conditions subject to which such project or scheme was notified; or (ii) report in respect of such eligible project or scheme has not been furnished after end of each financial year, in such form and setting forth such particulars and within such time as may be prescribed, such notification may be withdrawn in same manner in which it was issued: Provided that reasonable opportunity of showing cause against proposed withdrawal shall be given by National Committee to concerned association, institution, public sector company or local authority, as case may be: Provided further that copy of notification by which notification of eligible project or scheme is withdrawn shall be forwarded to Assessing Officer having jurisdiction over concerned association, institution, public sector company or local authority, as case may be, carrying on such eligible project or scheme. 14 (6) Notwithstanding anything contained in any other provision of this Act, where (i) approval of National Committee, granted to association or institution, is withdrawn under sub section (4) or notification in respect of eligible project or scheme is withdrawn in case of public sector company or local authority or association or institution under sub section (5); or (ii) company has claimed deduction under proviso to sub section (1) in respect of any expenditure incurred directly on eligible project or scheme and approval for such project or scheme is withdrawn by National Committee under sub section (5), total amount of payment received by public sector company or local authority or association or institution, as case may be, in respect of which such company or authority or association or institution has furnished certificate referred to in clause (a) of sub section (2) or deduction claimed by company under proviso to sub section (1) shall be deemed to be income of such company or authority or association or institution, as case may be, for previous year in which such approval or notification is withdrawn and tax shall be charged on such income at maximum marginal rate in force for that year. (7) No deduction under this section shall be allowed in respect of any assessment year 15 commencing on or after 1st day of April, 2018. Explanation. For purposes of this section, (a) "National Committee" means Committee constituted by Central Government, from amongst persons of eminence in public life, in accordance with rules made under this Act; (b) "eligible project or scheme" means such project or scheme for promoting social and economic welfare of, or uplift of, public as Central Government may, by notification in Official Gazette, specify in this behalf on recommendations of National Committee. 19. It is not in dispute that 28 projects were approved by Committee by notification dated 07.12.2015 but none of them (27) has come forward to question constitutional validity of sub section (7) except appellant herein. In other words, out of 28 projects owners whose projects were approved by Committee by notification dated 07.12.2015, only appellant herein has felt aggrieved and filed petition in High Court. 16 20. Be that as it may, as rightly argued by learned counsel for respondent (Revenue), real aggrieved parties, which should have felt aggrieved by insertion of sub section (7) in Section 35AC of Act, were those assesses, i.e., Donors who despite paying donation to appellant were not allowed to claim deduction of said amount from their total income during financial year 2017 2018. 21. In other words, one of main objects for which Section 35AC was enacted was to allow assessees to claim deduction of amount paid by them to appellant for their project. 22. As mentioned above, none of assessees (Donee), who claimed to have paid amount to any eligible projects came forward complaining that despite their donating amount to appellant 17 for their project, they were denied benefit of claiming deduction of such amount from their total income by virtue of sub section (7) of Section 35AC of Act during financial year 2017 2018. 23. It is not in dispute that benefit of deduction available under Section 35AC of Act was duly availed of by all assessees for two financial years, namely, 2015 2016 and 2016 2017. 24. dispute is now confined only to third financial year, i.e., 2017 2018 because for this year, assessees were not allowed to claim deduction of amount paid by them to appellant on account of insertion of sub section(7) in Section 35AC of Act with effect from 01.04.2017. 25. We are of view that sub section (7) is prospective in its operation and, therefore, all assessees were rightly allowed to claim deduction of 18 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 deduction for 2015 2016 and 2016 2017 too would have been disallowed. Admittedly, such is not case here. 26. As rightly argued by learned counsel for respondent (Revenue), plea of promissory estoppel is not available to assessee against exercise of legislative power and nor any vested right accrues to assessee in matter of grant of any tax concession to him. In other words, neither appellant nor assessee has any right to set up plea of promissory estoppel against exercise of legislative power such as one exercised while inserting sub section (7) in Section 35AC of Act (see M/s Motilal Padampat Sugar 19 Mills Co. Ltd.(supra) and other cases relied on by learned counsel for respondent Revenue). It is more so when we find that this sub section was made applicable uniformly to all alike appellant prospectively. 27. It is not in dispute that now time to donate amount to eligible projects for claiming deduction from total income for year 2017 2018 has expired. It is now no longer available due to efflux of time. In this view of matter, even if appellant received any amount from any assessee for their project, no deduction could be allowed to such assessee either for period 2017 2018 or for any subsequent period. 28. It was, however, stated by learned counsel for appellant that appellant has received 3.84 crores during year 2017 2018 from various assessees. It was also stated that if sub section(7) 20 had been held not applicable to appellant's project then appellant would have received much more amount than Rs.3.84 crores during financial year 2017 2018, which is clear from amount received by appellant in earlier two years prior to insertion of sub section(7), i.e., Rs. 10.97 crores during financial year 2015 2016 and Rs. 20.55 crores during financial year 2016 2017. 29. We find no merit in this submission. In taxing statute, plea based on equity or/and hardship is not legally sustainable. constitutional validity of any provision and especially taxing provision cannot be struck down on such reasoning. 30. Learned counsel for appellant then urged that having regard to fact that appellant has set up charitable hospital and that they were not 21 able to receive more amount by way of donation for their project in third financial year 2017 2018, this Court may consider appropriate to invoke powers under Article 142 of Constitution and allow appellant to receive donation even for third financial year in terms of 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 rights of any taxpayer qua Revenue; Second, once action is held in accordance with law and especially in tax matters, question of invoking powers under Article 142 of Constitution does not arise; and third, appellant's Donors were admittedly allowed to claim deduction of amount paid by them to appellant under 22 Section 35AC during two financial years 2015 2016 and 2016 2017. It is for all these reasons, matter must rest there. 32. Learned counsel for appellant placed reliance on 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 light of foregoing discussion and findings recorded, arguments based on principle laid down in these decisions cannot be accepted. We, therefore, need not deal with this issue any more. 23 33. In view of foregoing discussion, we find no merit in appeal. It is accordingly dismissed. J. [ABHAY MANOHAR SAPRE] J. [INDU MALHOTRA] New Delhi; July 25, 2019 24 Prashanti Medical Services & Research Foundation v. Union of India & Or