"Backward Area" for the purpose of section 80HH of the Income-tax Act, 1961-Problems arising from the omission of the Eighth Schedule of the Income-tax Act with retrospective effect-Notification of backward areas-Certain clarifications-Regarding - Income Tax - 484/1987

"Backward Area" for the purpose of section 80HH of the Income-tax Act, 1961-Problems arising from the omission of the Eighth Schedule of the Income-tax Act with retrospective effect-Notification of backward areas-Certain clarifications-Regarding Circular No. 484 Dated 1/5/1987 By an amendment brought about by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, Explanation below sub-section (10) of section 80HH of the Income-tax Act, 1961, was substituted by sub-section (11) and the Eighth Schedule to the Income-tax Act was omitted. The said Explanation provided that in this section "backward area" meant an area specified in the list in the Eighth Schedule. The newly inserted sub-section (11) provides that for the purposes of this section, "backward area" means such area as the Central Government may, having regard to the stage of development of that area, by notification in the Official Gazette specify in this behalf. The Schedule was omitted with effect from 1-4-1984 and it was provided that notification under sub-section (11) could be issued so as to have retrospective effect to a date not earlier than 1-4-1983. In pursuance of the new provisions of sub-section (11), a Notification No. 7056 (F. No. 178/171/86-ITA. 1) dated 19-12-1986* effective 1-4-1983 was issued notifying the list of backward areas. In this notification, certain blocks/taluks, where investment had exceeded Rs. 30 crores as on 31-3-1983 were excluded. 2. In the interest of administrative convenience, it has been decided that the benefit of section 80HH in respect of any area will not be withdrawn retrospectively. The Taxation Laws (Amendment and Miscellaneous Provisions) Bill, 1986, received the assent of the President on 10-9-1986. It is, therefore, clarified that notwithstanding the aforesaid notification, all areas specified in the Eighth Schedule will continue to enjoy the benefit of section 80HH in respect of an industrial undertaking which begins to manufacture or produce articles before 10-9-1986 or in respect of the business of a hotel which starts functioning before 10-9-1986. 3. It may further be clarified that the reference to the districts in the Schedule to the aforesaid notification is to the areas comprised in the respective districts as on 1-10-1970, i.e., prior to their re-categorisation and, therefore, the areas carved out of these districts thereafter (except those specifically excluded within brackets) will be entitled to the benefit under this provision. 4. On account of a typographical error, the name of district "Jind" has been mentioned as "Hind" under Column No. 3 against entry No. 5 (pertaining to Haryana State) of the Schedule to the said notification. The area comprised in the Jind District of Haryana State will, therefore, be entitled to the benefit of this provision. 5. Hindi version will follow shortly. (Sd.) Roshan Sahay, Under Secretary, Central Board of Direct Taxes. * See [1987] 165 ITR (St.) 294.