Section 280ZA — Tax credit certificates for shifting of industrial undertaking from urban area
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: OMITTED by the Finance Act, 1987, w.e.f. 1-4-1988 (originally inserted by the Finance Act, 1965, w.e.f. 1-4-1965); replaced by the capital-gains exemption in s. 54G.
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 — tax credit certificate to a public company shifting its industrial undertaking out of a notified urban area, with prior Board approval.
Litigation profile: Materially litigated through its successor s. 54G; the Supreme Court in Fibre Boards directly construes the omission/replacement. Strongest section of the chapter for authority.
A. COMMENTARY
1. Object — dispersal of industry from cities
Section 280ZA gave a tax credit certificate to a public company that owned an industrial undertaking situated in a notified 'urban area' (as defined in s. 280Y(d)) and shifted that undertaking elsewhere with the prior approval of the Central Board. The avowed purpose was to encourage the dispersal of industry away from congested urban centres. The certificate was, again, an instrument set off against tax liability and otherwise refundable, administered through a Scheme framed under s. 280ZE.
2. From tax-credit certificate to capital-gains exemption (s. 54G)
The incentive design was changed root and branch by the Finance Act, 1987. Section 280ZA was omitted w.e.f. 1-4-1988 and, on the same date, s. 54G was inserted to grant, in its place, an exemption from capital gains where the gain on transfer of the urban undertaking's assets is reinvested in shifting to a non-urban area. The Supreme Court in Fibre Boards (P) Ltd. v. CIT read the Budget Speech, Notes on Clauses and the Memorandum together to hold that the legislative intent was to do away with the certificate mechanism and the Board's prior approval and to substitute the self-operating s. 54G relief.
3. What survived the change — the General Clauses Act point
Because the omission of s. 280ZA was accompanied by re-enactment (with modification) as s. 54G, the Court held the change to be a 'repeal' within the General Clauses Act. Consequently s. 24 saved the subordinate legislation made under the old regime: a 1967 notification declaring Thane an 'urban area' under s. 280Y(d) continued to enure for the purposes of s. 54G. This is the single most important practical takeaway — urban-area notifications of the XXII-B era did not lapse with the chapter but carry into the successor relief. The Court also clarified s. 54G on the merits: the assessee has a three-year window after transfer to purchase/acquire the new assets, and it is enough that the capital gain is 'utilised' (including by advances to suppliers) within the prescribed period.
4. Why this section carries real case law
Unlike the other XXII-B incentives, s. 280ZA has a living successor (s. 54G) that is regularly litigated, and the Supreme Court has authoritatively traced the lineage. The authorities below are therefore genuinely on point — they construe the omission of 280ZA, the continuity of its notifications, and the contours of the relief that replaced it.
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 for shifting of industrial undertaking from urban area.
280ZA. [Omitted by the Finance Act, 1987, w.e.f. 1-4-1988. Original section was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
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
This is the best-served section of the chapter: the omission and its replacement are construed by the Supreme Court, supported by the omission-effect jurisprudence and the successor-relief decisions.
Cluster — The leading authority: omission of 280ZA and continuity into s. 54G
Facts: Assessee shifted its industrial undertaking from Majiwada, Thane (a notified urban area under a 1967 s. 280Y(d) notification) to Kurukumbh, Pune, claiming s. 54G exemption on the capital gain, having paid advances for new land/plant within the year.
Issue 1 — continuity: Whether the 1967 urban-area notification, made under a since-omitted provision, still supported s. 54G relief.
Held 1: Yes. The omission of s. 280ZA with simultaneous re-enactment as s. 54G is a 'repeal'; s. 24 of the General Clauses Act continues the notification for s. 54G. Section 280Y(d) was a definition parasitic on 280ZA and its later omission in 1990 was merely the removal of a redundancy.
Issue 2 — 'utilisation': Whether advances for purchase, the assets not yet acquired in the year of transfer, satisfied s. 54G.
Held 2: Yes. Section 54G gives a three-year window; it suffices that the capital gain is 'utilised' (including by advances) towards purchase/acquisition. The High Court's contrary view was reversed.
Referred: CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632; Poonjabhai Vanmalidas v. CIT, 1992 Supp (1) SCC 182; State of Punjab v. Harnek Singh, (2002) 3 SCC 481; Rayala Corporation, (1969) 2 SCC 412; Kolhapur Canesugar, (2000) 2 SCC 536.
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 280ZA — Tax credit certificates for shifting of industrial undertaking from urban area
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: OMITTED by the Finance Act, 1987, w.e.f. 1-4-1988 (originally inserted by the Finance Act, 1965, w.e.f. 1-4-1965); replaced by the capital-gains exemption in s. 54G.
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 — tax credit certificate to a public company shifting its industrial undertaking out of a notified urban area, with prior Board approval.
Litigation profile: Materially litigated through its successor s. 54G; the Supreme Court in Fibre Boards directly construes the omission/replacement. Strongest section of the chapter for authority.
A. COMMENTARY
1. Object — dispersal of industry from cities
Section 280ZA gave a tax credit certificate to a public company that owned an industrial undertaking situated in a notified 'urban area' (as defined in s. 280Y(d)) and shifted that undertaking elsewhere with the prior approval of the Central Board. The avowed purpose was to encourage the dispersal of industry away from congested urban centres. The certificate was, again, an instrument set off against tax liability and otherwise refundable, administered through a Scheme framed under s. 280ZE.
2. From tax-credit certificate to capital-gains exemption (s. 54G)
The incentive design was changed root and branch by the Finance Act, 1987. Section 280ZA was omitted w.e.f. 1-4-1988 and, on the same date, s. 54G was inserted to grant, in its place, an exemption from capital gains where the gain on transfer of the urban undertaking's assets is reinvested in shifting to a non-urban area. The Supreme Court in Fibre Boards (P) Ltd. v. CIT read the Budget Speech, Notes on Clauses and the Memorandum together to hold that the legislative intent was to do away with the certificate mechanism and the Board's prior approval and to substitute the self-operating s. 54G relief.
3. What survived the change — the General Clauses Act point
Because the omission of s. 280ZA was accompanied by re-enactment (with modification) as s. 54G, the Court held the change to be a 'repeal' within the General Clauses Act. Consequently s. 24 saved the subordinate legislation made under the old regime: a 1967 notification declaring Thane an 'urban area' under s. 280Y(d) continued to enure for the purposes of s. 54G. This is the single most important practical takeaway — urban-area notifications of the XXII-B era did not lapse with the chapter but carry into the successor relief. The Court also clarified s. 54G on the merits: the assessee has a three-year window after transfer to purchase/acquire the new assets, and it is enough that the capital gain is 'utilised' (including by advances to suppliers) within the prescribed period.
4. Why this section carries real case law
Unlike the other XXII-B incentives, s. 280ZA has a living successor (s. 54G) that is regularly litigated, and the Supreme Court has authoritatively traced the lineage. The authorities below are therefore genuinely on point — they construe the omission of 280ZA, the continuity of its notifications, and the contours of the relief that replaced it.
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 for shifting of industrial undertaking from urban area.
280ZA. [Omitted by the Finance Act, 1987, w.e.f. 1-4-1988. Original section was inserted by the Finance Act, 1965, w.e.f. 1-4-1965.]
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
This is the best-served section of the chapter: the omission and its replacement are construed by the Supreme Court, supported by the omission-effect jurisprudence and the successor-relief decisions.
Cluster — The leading authority: omission of 280ZA and continuity into s. 54G
Fibre Boards (P) Ltd. v. CIT, (2015) 376 ITR 596 (SC)
Facts: Assessee shifted its industrial undertaking from Majiwada, Thane (a notified urban area under a 1967 s. 280Y(d) notification) to Kurukumbh, Pune, claiming s. 54G exemption on the capital gain, having paid advances for new land/plant within the year.
Issue 1 — continuity: Whether the 1967 urban-area notification, made under a since-omitted provision, still supported s. 54G relief.
Held 1: Yes. The omission of s. 280ZA with simultaneous re-enactment as s. 54G is a 'repeal'; s. 24 of the General Clauses Act continues the notification for s. 54G. Section 280Y(d) was a definition parasitic on 280ZA and its later omission in 1990 was merely the removal of a redundancy.
Issue 2 — 'utilisation': Whether advances for purchase, the assets not yet acquired in the year of transfer, satisfied s. 54G.
Held 2: Yes. Section 54G gives a three-year window; it suffices that the capital gain is 'utilised' (including by advances) towards purchase/acquisition. The High Court's contrary view was reversed.
Referred: CIT v. Venkateswara Hatcheries (P) Ltd., (1999) 3 SCC 632; Poonjabhai Vanmalidas v. CIT, 1992 Supp (1) SCC 182; State of Punjab v. Harnek Singh, (2002) 3 SCC 481; Rayala Corporation, (1969) 2 SCC 412; Kolhapur Canesugar, (2000) 2 SCC 536.
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.