Section 54G exemption requires a current urban-area notification; retrospective operation was rejected on the facts.

Section 54G exemption depended on a valid urban-area declaration in force for the relevant period, and the 27.04.2006 notification for Anekal operated only from its publication date because neither the statute nor the notification gave it retrospective effect. The earlier notification under a different shifting-related provision could not be applied to Section 54G, and exemption provisions were required to be construed strictly. Reliance on Fibre Boards Private Limited did not assist because the statutory three-year window and the conditions for use of sale proceeds were not satisfied on the facts. The assessee was therefore not entitled to Section 54G relief for the assessment year in question.

---

---

Issues: Whether the assessee was entitled to exemption under Section 54G of the Income-tax Act, 1961 on the basis of the 27.04.2006 notification declaring Anekal as an urban area, and whether that notification could operate retrospectively for the assessment year in question.

Analysis: Explanation 2 to Section 54G(1) empowers the Central Government to declare an area as an urban area for the purpose of Section 54G. The notification dated 27.04.2006 was issued under that power, but nothing in the notification indicated retrospective operation. A notification takes effect from the date of its publication unless the statute or the notification expressly provides otherwise. The notification issued under the earlier provision relating to tax credit certificates for shifting of industrial undertakings could not be automatically applied to the exemption under Section 54G. The reliance placed on the later Supreme Court decision in Fibre Boards Private Limited did not assist the assessee on the facts, since the statutory window of three years and the conditions for utilisation of the sale proceeds were not satisfied in the present case. Exemption provisions must be construed strictly.

Conclusion: The assessee was not entitled to the benefit of Section 54G on the facts of the case, and the notification dated 27.04.2006 did not operate retrospectively.

---