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Prashanti Medical Services & Research Foundation v. Union of India & Ors.

Civil Appeal · 2019 INSC 813Decided 25 Jul 2019
Civil Appeal No. 5849 of 2019
Justice Abhay Manohar Sapre · Justice Indu Malhotra

Background

The appellant, a charitable trust running a heart hospital in Ahmedabad, got its hospital project approved under Section 35AC of the Income Tax Act, which allowed donors to claim a tax deduction for donations made to the project for specified financial years. After the approved window lapsed, the appellant was unable to secure further donations in a later financial year and challenged the resulting restriction before the Gujarat High Court, which dismissed its writ petition. The trust then appealed to the Supreme Court, also seeking that the Court use its special constitutional power (Article 142) to extend the donation-deduction benefit.

Decision Breakdown

The Supreme Court held that equity or hardship cannot override the plain requirements of a taxing statute, and that constitutional validity or operation of a tax provision cannot be set aside merely because compliance proved difficult for the assessee. It also held that Article 142 cannot be invoked to extend a tax benefit beyond what the statute and notification actually permit, especially once donors had already availed the deduction for the years for which approval existed. Finding no merit in any of the appellant's arguments, the Court dismissed the appeal.

Lesson Learnt

Tax benefits run strictly on the terms fixed by the statute and the approving notification: hardship in meeting a deadline or shortfall in donations is not, by itself, a legal ground for a court to extend or rewrite those terms, even using its wide discretionary powers.

Official source (sci.gov.in)View Judgment (PDF)

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