Summary
The statutory withdrawal of section 35AC deductions from assessment year 2018–19 applied to donations for the third year of an already-approved hospital project. The amendment was prospective and did not disturb deductions for the preceding two years. Earlier project approval created no vested right to continued tax concessions and could not support promissory estoppel against legislation. Reduced donations and charitable hardship did not justify invalidation or an Article 142 exception.
Issues
- Whether the earlier three-year project approval preserved donor deductions after section 35AC(7) took effect.
- Whether hardship or promissory estoppel justified an exception.
Provisions considered
- Section 35AC(7), Income-tax Act, 1961Prospectively barred deductions for assessment years commencing on or after 1 April 2018, including the disputed third financial year’s donations despite earlier project approval. (¶¶ 18, 23–27)
Held
- The disputed change affected only the third financial year, 2017–18; deductions for 2015–16 and 2016–17 remained available. The Court therefore rejected characterising the withdrawal as retrospective. (¶ 23–25)
- Neither project approval nor prior enjoyment of the concession created a vested right against Parliament’s prospective, uniformly applicable change. Promissory estoppel could not be invoked against that exercise of legislative power. (¶ 26)
- The statutory deduction benefited donors, none of whom had brought the challenge. The foundation’s expectation of receiving more donations did not provide a basis to strike down the tax provision. (¶¶ 20–22, 28–29)
- Equity or hardship did not justify extending the deduction beyond the lawful statutory period. The Court declined to use Article 142 to override the valid tax change for the charitable project. (¶ 29–32)
Result
Appeal dismissed; rejection of the challenge to section 35AC(7) and denial of the claimed exception upheld.