Court Upholds Exclusion of Sikandrabad Block from Section 80HH Benefits

The court dismissed the writ petition challenging the exclusion of Sikandrabad Block from backward areas for Section 80HH benefits. It upheld the validity of Notification S.O. 165 dated 19.12.1986 and the subsequent amendment, finding no discrimination or violation of constitutional provisions. The court rejected the application of promissory estoppel, emphasizing the government's authority to determine backward areas and the lack of estoppel against the statute. Consequently, the petitioner's claim for deduction under Section 80HH for the years 1995-96, 1996-97, and 1997-98 was denied.

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Issues: Challenge to Notification S.O. 165 dated 19.12.1986 excluding Sikandrabad Block from backward areas for Section 80HH benefits, quashing of Circular restricting deduction, setting aside assessment orders for 1995-96, 1996-97, and 1997-98.

Analysis:
1. The petitioner sought to set aside Notification S.O. 165 dated 19.12.1986, excluding Sikandrabad Block from the list of backward areas for Section 80HH benefits under the Income Tax Act. Additionally, the petitioner aimed to quash the Circular issued by the Central Board of Direct Taxes, restricting the deduction under Section 80HH to units set up in excluded areas as per the notification. The petitioner also requested the setting aside of assessment orders for the years 1995-96, 1996-97, and 1997-98.

2. Section 80HH of the Income Tax Act, introduced in 1974, aimed to incentivize industrial development in backward areas by providing a deduction of 20% from the profits of industrial undertakings established in such areas. The 8th Schedule of the Act listed backward areas, including District Bulandshahar in its entirety.

3. The petitioner applied for land in Sikandrabad, District Bulandshahar, in 1985 to set up a unit for manufacturing ceramic glazed tiles. Despite taking steps to establish the project, a subsequent amendment in 1986 redefined "backward area" under Section 80HH, excluding Sikandrabad Block through Notification S.O. 165 dated 19.12.1986.

4. The petitioner alleged that the exclusion of Sikandrabad Block was arbitrary, illegal, and discriminatory, violating constitutional provisions. However, the court held that the government has the authority to determine backward areas, finding no discrimination in this case.

5. The petitioner invoked the principle of promissory estoppel, but the court rejected this argument, emphasizing that there is no estoppel against the statute. Citing a Supreme Court judgment, the court distinguished the case, highlighting that the law had been amended by Parliament, making the petitioner ineligible for benefits under the previous decision.

6. Ultimately, the court dismissed the writ petition, noting that Sikandrabad Block was no longer considered a backward area as per the notification, and the petitioner could not benefit from the previous law due to the subsequent amendment. The judgment upheld the validity of the notification and the exclusion of Sikandrabad Block from backward areas for Section 80HH benefits.

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