TaxTMI 
TaxTMI 
2019 (7) TMI 1377
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....n under Section 35AC of the Income Tax Act, 1961 (hereinafter referred to as "the Act) to the National Committee for Promotion of Social and Economic Welfare, Department of Revenue, North Block, New Delhi (hereinafter referred to as "the Committee") 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. 7. 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 dated 07.12.2015. It reads as under: S.No. Name of the Institution Project or scheme and estimated cost thereof Maximum amount of cost to be allowed as deduct....
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....espondent (Revenue) supported insertion of subsection (7) in Section 35AC and inter alia contended that, firstly, insertion of subsection (7) is prospective in nature; secondly, it operates qua every person alike the appellant irrespective of the approval granted by the Committee; Thirdly, subsection (7), in clear terms, provides discontinuance of deduction only from the assessment year 20182019 onwards; Fourthly, this intention of the legislature is clear from the perusal of the budget speech of the Minister of Finance, notes on clauses and memorandum explaining the amended provisions in the Finance Bill, 2016; Fifthly, the appellant not being an assessee under Section 35AC of the Act has no locus to raise the issue in question and nor they are, in any way, affected due to insertion of subsection (7); Sixthly, the appellant neither has any vested right in such matters nor has any right to set up a plea of promissory estoppel against the exercise of any legislative power such as the one exercised by the Parliament while inserting subsection( 7); and lastly, the appellant has already received substantial donations from several assessees for their hospital project during the two fina....
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....and on perusal of the record of the case, we are not inclined to interfere with the impugned order of the High Court. 18. Section 35AC was inserted in the Act with effect from 01.04.1992 whereas subsection (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 an assessee incurs any expenditure by way of payment of any sum to a public sector company or a local authority or to an association or institution approved by the National Committee for carrying out any eligible project or scheme, the assessee shall, subject to the provisions of this section, be allowed a deduction of the amount of such expenditure incurred during the previous year : Provided that a company may, for claiming the deduction under this subsection, incur expenditure either by way of payment of any sum as aforesaid or directly on the eligible project or scheme. (2) The deduction under subsection (1) shall not be allowed unless the assessee furnishes along with his return of income a certificate - (a) where the payment is to a public sector company or a local authority or an association or institution referred to in subs....
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....se (b) of the Explanation, and subsequently- (i) the National Committee is satisfied that the project or the scheme is not being carried on in accordance with all or any of the conditions subject to which such project or scheme was notified; or (ii) a report in respect of such eligible project or scheme has not been furnished after the 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 the same manner in which it was issued: Provided that a reasonable opportunity of showing cause against the proposed withdrawal shall be given by the National Committee to the concerned association, institution, public sector company or local authority, as the case may be: Provided further that a copy of the notification by which the notification of the eligible project or scheme is withdrawn shall be forwarded to the Assessing Officer having jurisdiction over the concerned association, institution, public sector company or local authority, as the case may be, carrying on such eligible project or scheme. (6) Notwithstanding anything contained in any other provision of this Act, whe....
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....arned counsel for the respondent (Revenue), the real aggrieved parties, which should have felt aggrieved by insertion of subsection (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 20172018. 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 subsection (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 fina....