The Central Board of Direct Taxes (CBDT) has issued a significant notification, granting the Baddi Barotiwala Nalagarh Development Authority (BBNDA) a retrospective income tax exemption. This exemption, under Section 10(46) of the Income-tax Act, 1961, applies to specified income sources for the Assessment Years 2024-25, 2025-26, and 2026-27.
The BBNDA, a statutory body established by the Government of Himachal Pradesh, plays a crucial role in the planned development of the Baddi-Barotiwala-Nalagarh industrial region. The tax relief aims to support its ongoing functions and projects.
Scope of the Exemption
According to the CBDT notification, the income tax exemption covers several key revenue streams for the Himachal Pradesh authority, including:
- Grants received from the Central Government or the Government of Himachal Pradesh.
- Revenue receipts generated under the Himachal Pradesh Town and Country Planning Act, 1977.
- Interest earned from bank deposits.
Conditions for Continued Validity
The retrospective tax exemption is not unconditional. The BBNDA must adhere to specific stipulations outlined by the CBDT. These include a mandate that the authority must not engage in any commercial activity. Furthermore, its core functions and the nature of its exempt income must remain consistent throughout the relevant financial years.
The BBNDA is also required to file its income tax returns in compliance with Section 139(4C)(g) of the Income-tax Act, 1961. Failure to meet these conditions could lead to the withdrawal of the exemption and potentially trigger penal actions under the provisions of the repealed Income-tax Act.
Validity Despite Repealed Act
A notable aspect of this notification is its issuance despite the Income-tax Act, 1961, having been repealed by the Income-tax Act, 2025. The government has clarified that provisions of the older law continue to apply to pending proceedings and earlier assessment years. This transitional arrangement, specifically Section 536 of the Income-tax Act, 2025, preserves rights, obligations, and proceedings initiated under the 1961 Act.
Consequently, the Central Government retains the authority to issue notifications under Section 10(46) of the repealed law for eligible bodies concerning prior assessment years. Section 10(46) generally grants income tax exemption to specified statutory bodies, authorities, boards, trusts, and commissions, subject to certain conditions and notification by the Central Government.