Section 280Z — Tax credit certificates to certain equity shareholders
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: OMITTED by the Finance Act, 1990, w.e.f. 1-4-1990 (originally inserted by the Finance Act, 1965, w.e.f. 1-4-1965).
Finance Act, 2026: Makes no change. The Finance Act, 2026 does not touch any section of Chapter XXII-B; the chapter remained omitted before, and remains omitted after, the 2026 amendments.
Mechanism: Incentive provision — grant of a tax credit certificate referable to equity shareholding/dividends, encashable against income-tax or refundable.
Litigation profile: Very sparse direct authority; section now historic and subject to the transitional production-bar of 31-3-1991. Candour rule applied.
A. COMMENTARY
1. Place in the 1965 scheme
Section 280Z was one of the five operative incentives in the original Chapter XXII-B. Broadly, it provided for the grant of a tax credit certificate referable to equity shareholding in Indian companies — part of the mid-1960s policy of channelling savings into corporate equity. A tax credit certificate was not a cash subsidy: it was an instrument that could be set off against the holder's income-tax liability under the 1922 or 1961 Act, with any unadjusted balance refundable. The mechanism was administered through a Scheme framed under s. 280ZE.
2. The transitional production-bar
When the chapter was omitted by the Finance Act, 1990, the legislature inserted a hard cut-off, preserved verbatim in the bare Act's editorial note: no tax credit certificate granted under s. 280Z (or s. 280ZC) could be produced before the Assessing Officer after 31 March 1991 for the purposes of sub-section (6) of s. 280Z (or sub-section (4) of s. 280ZC). After that date an unutilised 280Z certificate became a dead instrument. This express sunset, rather than any general doctrine, governs the residual life of 280Z entitlements.
3. State of the case law — candour
Section 280Z did not generate a reported body of merits litigation comparable to the export (280ZC) and excess-production (280ZD) incentives, which were litigated heavily because large sums turned on the identity of the exporter and the unit of computation. Consistent with the Treatise's discipline, no decision is attributed to 280Z that does not concern it. The section is therefore annotated through (a) the express transitional bar, and (b) the omission-effect jurisprudence that determines whether any accrued certificate or pending claim survived 1-4-1990 and 31-3-1991.
Finance Act, 2026 — position
Chapter XXII-B is wholly omitted and the Finance Act, 2026 leaves it untouched. The references to 'section 280...' in the Finance Act, 2026 relate to Chapter XXII (Offences and Prosecutions) — e.g. ss. 276B-276D, 277, 278, 280 — and to the corresponding provisions of the Income-tax Act, 2025; they have no bearing on the tax-credit-certificate sections 280Y-280ZE. No revival, re-enactment or saving of this chapter is proposed.
B. STATUTORY TEXT (verbatim from the bare Act)
The section stands omitted. The current bare Act (as amended up to the Finance Act, 2025) prints only the side-heading and the editorial omission note reproduced below; the original 1965-1990 text is not carried in the bare Act. Reproduced verbatim:
Tax credit certificates to certain equity shareholders.
280Z. [Omitted by the Finance Act, 1990, w.e.f. 1-4-1990.]
Chapter-level editorial note (verbatim):
[Chapter XXII-B, consisting of sections 280Y, 280Z, 280ZA, 280ZB, 280ZC, 280ZD and 280ZE, omitted by the Finance Act, 1990, w.e.f. 1-4-1990. No tax credit certificate granted under section 280Z or section 280ZC shall be produced before the Assessing Officer after the 31st day of March, 1991 for the purposes of sub-section (6) of section 280Z or, as the case may be, sub-section (4) of section 280ZC. Earlier Chapter XXII-B was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
C. AUTHORITIES
Direct merits authority on s. 280Z is not available; the section is governed by the express production-bar and the omission jurisprudence below (cited as cognate authority).
Cluster — Legal effect of the omission of the chapter (General Clauses Act)
Because every section of Chapter XXII-B has been omitted, the practitioner question is no longer how the incentive worked but what survives the omission — accrued tax-credit certificates, pending claims, and pending proceedings. The governing authorities are the following, applied here as cognate authority (none arose on a tax-credit-certificate section, but each settles the principle on which any residual XXII-B claim now turns).
Section: 280Y(d) / 280ZA / 54G read with ss. 6 & 24, General Clauses Act, 1897.
Holding: The omission of s. 280ZA (and the consequential redundancy of s. 280Y(d), which only defined 'urban area' for s. 280ZA) and its re-enactment with modification as s. 54G was treated as a 'repeal' for the purposes of the General Clauses Act. The Court held that the expression 'repeal' in ss. 6 and 24 takes in an omission — even an implied repeal — so long as a provision is obliterated; accordingly the 1967 notification declaring Thane an urban area, issued under s. 280Y(d), continued to enure for s. 54G by virtue of s. 24.
Why it matters here: This is the leading modern pronouncement that directly construes Chapter XXII-B. It establishes that the dismantling of the chapter is a 'repeal', so saved rights and subordinate legislation made under the chapter do not automatically perish. It expressly disapproved the contrary reading that 'omission' is something wholly outside 'repeal'.
Read with: CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632 and State of Punjab v. Harnek Singh, (2002) 3 SCC 481 (both referred); and the omission/repeal debate noted below.
General Finance Co. v. ACIT, (2002) 257 ITR 338 (SC)
Section: s. 6, General Clauses Act, applied to an omitted penal provision (s. 276DD).
Holding: An 'omission' of a provision is distinct from a 'repeal'; s. 6 of the General Clauses Act, in terms, saves only the consequences of a 'repeal' and does not, of its own force, save proceedings under a provision that is merely omitted. A prosecution under the omitted s. 276DD could therefore not be launched or continued by invoking s. 6 after the omission. The Court, following Rayala Corporation and Kolhapur Canesugar, declined to treat omission as repeal for s. 6.
Why it matters here: The point of tension with Fibre Boards. For pending penal or recovery action keyed to an omitted XXII-B section, General Finance supplies the assessee's argument that nothing survives; Fibre Boards supplies the Revenue's. The two are reconciled on the footing that what is omitted-and-simultaneously-re-enacted (280ZA to 54G) is a 'repeal', whereas a bare omission with nothing put in its place (the penal context) is not saved by s. 6.
Rayala Corporation (P) Ltd. v. Director of Enforcement, (1969) 2 SCC 412 (SC)
Holding: A rule that is simply omitted (there, r. 132A of the Defence of India Rules) is not 'repealed' within s. 6 of the General Clauses Act, so proceedings cannot be commenced after the omission in the absence of an express saving.
Why it matters here: Foundational authority for the 'omission is not repeal' line relied on in General Finance and considered in Fibre Boards; bears directly on whether residual XXII-B claims/notices survive 1-4-1990.
Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 (SC, Constitution Bench)
Holding: Where a rule is deleted/omitted and no contrary intention or saving appears, s. 6 of the General Clauses Act is not attracted; whether pending proceedings continue depends on the language of the repealing/omitting provision and any saving clause.
Why it matters here: Confirms that the survival of accrued XXII-B rights and pending claims must be located in the omitting Finance Acts and the transitional bar (production of 280Z/280ZC certificates barred after 31-3-1991), not in any general presumption of continuance.
State of Orissa v. M.A. Tulloch & Co., AIR 1964 SC 1284 (SC, Constitution Bench)
Holding: Repeal may be express or implied; the form is immaterial so long as the earlier law is displaced. An implied repeal is as much a 'repeal' as an express one.
Why it matters here: Relied on in Fibre Boards to hold that the omission/replacement of XXII-B provisions is a 'repeal' attracting the saving in s. 24 of the General Clauses Act.
Shree Bhagwati Steel Rolling Mills v. CCE, 2015 (326) ELT 209 (SC)
Holding: Reiterating the approach in Fibre Boards, the Court held that 'repeal' in s. 6 of the General Clauses Act covers the obliteration of a provision howsoever effected; when s. 6 speaks of repeal of 'any enactment' it includes any provision of an Act, whether repealed or omitted.
Why it matters here: The most recent Supreme Court reinforcement of the Fibre Boards view, useful where the Revenue contends that an accrued XXII-B liability or right is preserved notwithstanding omission.
CHAPTER XXII-B — TAX CREDIT CERTIFICATES (HISTORIC)
Section 280Z — Tax credit certificates to certain equity shareholders
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: OMITTED by the Finance Act, 1990, w.e.f. 1-4-1990 (originally inserted by the Finance Act, 1965, w.e.f. 1-4-1965).
Finance Act, 2026: Makes no change. The Finance Act, 2026 does not touch any section of Chapter XXII-B; the chapter remained omitted before, and remains omitted after, the 2026 amendments.
Mechanism: Incentive provision — grant of a tax credit certificate referable to equity shareholding/dividends, encashable against income-tax or refundable.
Litigation profile: Very sparse direct authority; section now historic and subject to the transitional production-bar of 31-3-1991. Candour rule applied.
A. COMMENTARY
1. Place in the 1965 scheme
Section 280Z was one of the five operative incentives in the original Chapter XXII-B. Broadly, it provided for the grant of a tax credit certificate referable to equity shareholding in Indian companies — part of the mid-1960s policy of channelling savings into corporate equity. A tax credit certificate was not a cash subsidy: it was an instrument that could be set off against the holder's income-tax liability under the 1922 or 1961 Act, with any unadjusted balance refundable. The mechanism was administered through a Scheme framed under s. 280ZE.
2. The transitional production-bar
When the chapter was omitted by the Finance Act, 1990, the legislature inserted a hard cut-off, preserved verbatim in the bare Act's editorial note: no tax credit certificate granted under s. 280Z (or s. 280ZC) could be produced before the Assessing Officer after 31 March 1991 for the purposes of sub-section (6) of s. 280Z (or sub-section (4) of s. 280ZC). After that date an unutilised 280Z certificate became a dead instrument. This express sunset, rather than any general doctrine, governs the residual life of 280Z entitlements.
3. State of the case law — candour
Section 280Z did not generate a reported body of merits litigation comparable to the export (280ZC) and excess-production (280ZD) incentives, which were litigated heavily because large sums turned on the identity of the exporter and the unit of computation. Consistent with the Treatise's discipline, no decision is attributed to 280Z that does not concern it. The section is therefore annotated through (a) the express transitional bar, and (b) the omission-effect jurisprudence that determines whether any accrued certificate or pending claim survived 1-4-1990 and 31-3-1991.
Finance Act, 2026 — position
Chapter XXII-B is wholly omitted and the Finance Act, 2026 leaves it untouched. The references to 'section 280...' in the Finance Act, 2026 relate to Chapter XXII (Offences and Prosecutions) — e.g. ss. 276B-276D, 277, 278, 280 — and to the corresponding provisions of the Income-tax Act, 2025; they have no bearing on the tax-credit-certificate sections 280Y-280ZE. No revival, re-enactment or saving of this chapter is proposed.
B. STATUTORY TEXT (verbatim from the bare Act)
The section stands omitted. The current bare Act (as amended up to the Finance Act, 2025) prints only the side-heading and the editorial omission note reproduced below; the original 1965-1990 text is not carried in the bare Act. Reproduced verbatim:
Tax credit certificates to certain equity shareholders.
280Z. [Omitted by the Finance Act, 1990, w.e.f. 1-4-1990.]
Chapter-level editorial note (verbatim):
[Chapter XXII-B, consisting of sections 280Y, 280Z, 280ZA, 280ZB, 280ZC, 280ZD and 280ZE, omitted by the Finance Act, 1990, w.e.f. 1-4-1990. No tax credit certificate granted under section 280Z or section 280ZC shall be produced before the Assessing Officer after the 31st day of March, 1991 for the purposes of sub-section (6) of section 280Z or, as the case may be, sub-section (4) of section 280ZC. Earlier Chapter XXII-B was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
C. AUTHORITIES
Direct merits authority on s. 280Z is not available; the section is governed by the express production-bar and the omission jurisprudence below (cited as cognate authority).
Cluster — Legal effect of the omission of the chapter (General Clauses Act)
Because every section of Chapter XXII-B has been omitted, the practitioner question is no longer how the incentive worked but what survives the omission — accrued tax-credit certificates, pending claims, and pending proceedings. The governing authorities are the following, applied here as cognate authority (none arose on a tax-credit-certificate section, but each settles the principle on which any residual XXII-B claim now turns).
Fibre Boards (P) Ltd. v. CIT, (2015) 376 ITR 596 (SC)
Section: 280Y(d) / 280ZA / 54G read with ss. 6 & 24, General Clauses Act, 1897.
Holding: The omission of s. 280ZA (and the consequential redundancy of s. 280Y(d), which only defined 'urban area' for s. 280ZA) and its re-enactment with modification as s. 54G was treated as a 'repeal' for the purposes of the General Clauses Act. The Court held that the expression 'repeal' in ss. 6 and 24 takes in an omission — even an implied repeal — so long as a provision is obliterated; accordingly the 1967 notification declaring Thane an urban area, issued under s. 280Y(d), continued to enure for s. 54G by virtue of s. 24.
Why it matters here: This is the leading modern pronouncement that directly construes Chapter XXII-B. It establishes that the dismantling of the chapter is a 'repeal', so saved rights and subordinate legislation made under the chapter do not automatically perish. It expressly disapproved the contrary reading that 'omission' is something wholly outside 'repeal'.
Read with: CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632 and State of Punjab v. Harnek Singh, (2002) 3 SCC 481 (both referred); and the omission/repeal debate noted below.
General Finance Co. v. ACIT, (2002) 257 ITR 338 (SC)
Section: s. 6, General Clauses Act, applied to an omitted penal provision (s. 276DD).
Holding: An 'omission' of a provision is distinct from a 'repeal'; s. 6 of the General Clauses Act, in terms, saves only the consequences of a 'repeal' and does not, of its own force, save proceedings under a provision that is merely omitted. A prosecution under the omitted s. 276DD could therefore not be launched or continued by invoking s. 6 after the omission. The Court, following Rayala Corporation and Kolhapur Canesugar, declined to treat omission as repeal for s. 6.
Why it matters here: The point of tension with Fibre Boards. For pending penal or recovery action keyed to an omitted XXII-B section, General Finance supplies the assessee's argument that nothing survives; Fibre Boards supplies the Revenue's. The two are reconciled on the footing that what is omitted-and-simultaneously-re-enacted (280ZA to 54G) is a 'repeal', whereas a bare omission with nothing put in its place (the penal context) is not saved by s. 6.
Rayala Corporation (P) Ltd. v. Director of Enforcement, (1969) 2 SCC 412 (SC)
Holding: A rule that is simply omitted (there, r. 132A of the Defence of India Rules) is not 'repealed' within s. 6 of the General Clauses Act, so proceedings cannot be commenced after the omission in the absence of an express saving.
Why it matters here: Foundational authority for the 'omission is not repeal' line relied on in General Finance and considered in Fibre Boards; bears directly on whether residual XXII-B claims/notices survive 1-4-1990.
Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 (SC, Constitution Bench)
Holding: Where a rule is deleted/omitted and no contrary intention or saving appears, s. 6 of the General Clauses Act is not attracted; whether pending proceedings continue depends on the language of the repealing/omitting provision and any saving clause.
Why it matters here: Confirms that the survival of accrued XXII-B rights and pending claims must be located in the omitting Finance Acts and the transitional bar (production of 280Z/280ZC certificates barred after 31-3-1991), not in any general presumption of continuance.
State of Orissa v. M.A. Tulloch & Co., AIR 1964 SC 1284 (SC, Constitution Bench)
Holding: Repeal may be express or implied; the form is immaterial so long as the earlier law is displaced. An implied repeal is as much a 'repeal' as an express one.
Why it matters here: Relied on in Fibre Boards to hold that the omission/replacement of XXII-B provisions is a 'repeal' attracting the saving in s. 24 of the General Clauses Act.
Shree Bhagwati Steel Rolling Mills v. CCE, 2015 (326) ELT 209 (SC)
Holding: Reiterating the approach in Fibre Boards, the Court held that 'repeal' in s. 6 of the General Clauses Act covers the obliteration of a provision howsoever effected; when s. 6 speaks of repeal of 'any enactment' it includes any provision of an Act, whether repealed or omitted.
Why it matters here: The most recent Supreme Court reinforcement of the Fibre Boards view, useful where the Revenue contends that an accrued XXII-B liability or right is preserved notwithstanding omission.