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The Appellant-Petitioner is a Charitable Trust registered under the provisions of the Bombay Public Trust Act, 1950. The appellant has set up a Heart Hospital in Ahmadabad. The commencement of the project of the appellant's hospital began in the year 2014.
On 27.09.2014, the appellant filed an application under Section 35AC of the Income Tax Act, 1961 to the National Committee for Promotion of Social and Economic Welfare, Department of Revenue, North Block, New Delhi for grant of approval to their hospital project as specified in Section 35AC of the Act so as to enable any "assessee" to incur expenditure by way of making payment of any amount to the appellant for construction of their approved hospital project and accordingly claim appropriate deduction of such payment from his total income during the previous year. Like the appellant, several persons, as specified in Section 35AC of the Act, also made applications to the Committee for grant of approval to their hospital projects.
A notification was issued by the Government of India on 07.12.2015 mentioning therein that the Committee has approved 28 projects as "eligible projects" under Section 35AC of the Act. The name of the appellant appears at serial No. 10 in the notification.
The benefit of claiming deduction was, however, discontinued from the assessment year 20182019 by insertion of subsection(7) in Section 35AC of the Act by the Finance Act, 2016 with effect from 01.04.2017. 10. The appellant in the petition questioned the constitutional validity of subsection(7) of Section 35AC. It was also put to challenge 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 the Committee prior to insertion of subsection(7), i.e., 01.04.2017.
The Supreme Court held that , “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.”
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