Taxation of shipping profits: annual no-objection certificates allowed after DTAA verification and international traffic undertaking.
Assessing Officers may issue an annual No Objection Certificate, valid for one year, after verifying applicability of the DTAA provisions that allocate taxation of shipping profits to the resident state and confirming the non-resident shipping enterprise is engaged in international traffic; an undertaking must be obtained from the non-resident that none of its ships will operate in traffic other than international traffic during the NOC's currency.

No Objection Certificate for shipping profits enables annual exemption where DTAA assigns taxation to the owner's residence, subject to verification.
The Board permits the Assessing Officer to issue an annual No Objection Certificate, valid for one year, when a DTAA assigns taxation of shipping profits to the country of residence so that no tax is payable in India; the AO must verify DTAA applicability, ensure the enterprise is engaged exclusively in international traffic as defined in the DTAA, and obtain an undertaking that none of its ships will operate in non-international traffic during the NOC period.

Deduction under Section 80-O: brokerage retained by reinsurance agents qualifies when received in convertible foreign exchange.
When brokers deduct brokerage from gross reinsurance premia collected in India and remit net premia overseas, the brokerage retained by the reinsurance agent in India constitutes a receipt in convertible foreign exchange and is eligible for deduction under the stated provision, provided convertibility and FERA-related remittance requirements are satisfied.

Payment under section 172 treated as tax on voyage receipts, not advance tax, so no interest under sections 234B/234C.
Tax on voyage receipts under section 172 is payable before port clearance; a non-resident may elect assessment on total income under general provisions, and tax paid under section 172(4) is treated as payment toward that assessment but is not treated as advance tax. Therefore, such taxpayers are not liable for advance-tax interest provisions nor entitled to refund interest for income solely from carriage by shipping.

Prosecution establishment expenses now charged in addition to compounding and litigation fees for income-tax offences.
Prosecution Establishment Expenses are required to be charged in addition to the compounding fee and litigation expenses when compounding offences under the Income-tax Act, to compensate the Department for prosecution-related time and resources; a graded fixed fee schedule applies according to the scale of tax involved, and these amounts are expressly additive to existing compounding and litigation charges.

Section 80HHC benefit: exports of cut and polished granite dimensional blocks qualify where mechanical processing and value addition occur.
The Board clarifies that when rough granite is cut into dimensional blocks of uniform colour and size, it undergoes mechanical processing, dressing and polishing that remove natural flaws and constitute value addition; accordingly, profits from export of such dimensional granite blocks qualify for deduction under section 80HHC of the Income tax Act.

Tax deduction at source rates: apply the Finance Act or treaty rate that favors the taxpayer for cross-border royalties.
Withholding on remittances such as royalties and technical fees must use the applicable rates in force: either the Finance Act rate for the year or the rate under the relevant Double Taxation Avoidance Agreement, and where a treaty is in force tax must be deducted at the rate more beneficial to the assessee.

Notice under Income-tax Act: revised ITNS format extends response period and updates officer titles and taxpayer contact points.
Modification to the notice format for assessments where income is believed to have escaped assessment: the response period is changed to "before the expiry of 31 days"; the first page designation is changed to "Assessing Officer"; the signing authority wording is revised to cite Deputy Commissioner/Commissioner/Chief Commissioner of Income-tax; and the second-page note directs taxpayers needing help to contact the Public Relations Officer, Income-tax Officer (Headquarters) or the Assessing Officer. The amended ITNS format is circulated for compliance.

Tax treatment of employer provided meals clarified: small daily meal cost paid directly to caterer not taxable to employee.
The circular modifies prior guidance on expenditure for food or beverages supplied to employees, treating such expenditure as entertainment expenditure and instructing assessing officers on its assessment. It substitutes the prior employee-tax statement with a provision that, where the employer pays the caterer, restaurant, eating place or canteen directly, the employee will not be taxed on a small daily meal benefit up to the prescribed administrative threshold, and directs officers to implement this concession.

Taxability of surrender consideration: statutory tenants' receipts treated as casual income and therefore taxable under income tax law.
The tribunal held that payments received by a statutory tenant under the Bombay Rent Act for surrendering possession cannot be treated as proceeds of a capital asset sale because the tenant lacks a transferable contractual interest; such receipts are casual and non-recurring income and are taxable under the Income tax Act.

Presumptive taxation exclusion: presumptive-basis cases excluded from sample scrutiny, except those subject to compulsory scrutiny.
Cases under presumptive taxation schemes are excluded from sample scrutiny, except where they fall within the Board's compulsory scrutiny class; Instruction No. 1917 is modified to this extent. Chief Commissioners and Directors General are directed to ensure uniform adherence to the prescribed sample-selection procedure set out in Instruction No. 1917, addressing observed deviations in practice.

Withdrawal of prosecution: notify trial court when tax appellate reductions are accepted to facilitate complaint discharge.
Where appellate reductions in quantum or penalty are accepted by the Department, Chief Commissioners must direct Departmental Prosecution Counsel to inform the Trial Court of the changed circumstances and resulting infirmity in the prosecution complaint, rather than forwarding proposals for withdrawal to the Board, to facilitate disposal and discharge of the complaint.

Compounding fee calculation: compute fee from tax on concealed income at maximum marginal rate, then apply prescribed percentage tiers.
Compounding fee must be computed by reference to the income sought to be concealed and the tax on that income calculated at the maximum marginal rate. The fee is set at 100% of that tax where the concealed income is below the monetary threshold, and 200% where it exceeds the threshold, replacing divergent interpretations based on tax alone or aggregated tax, interest and penalties.

Tax deduction at source exclusion for non-residents paying Indian professionals when no local presence, subject to quarterly reporting.
Payments of professional fees made through regular banking channels by non-residents who have no agent, business connection, or permanent establishment in India to resident chartered accountants, lawyers, advocates or solicitors are not subject to tax deduction at source under the provision governing professional fees. Such non-resident payers must, however, submit quarterly statements identifying the payee to the designated office of the central tax administration as a condition of this treatment.

Rectification under section 154: post-assessment approval notifications can justify amending assessments if conditions are met.
The Board's position is that where approval notifications under section 10(23C)(iv) or section 35(1)(ii)/(iii) are issued after completion of assessments but are applicable to those assessment years, the subsequent notification constitutes a mistake apparent from the record and may be rectified under section 154; Assessing Officers must ensure the conditions of the approval are satisfied before granting rectification.

Deduction for software exports: whether total turnover for the deduction includes non software business turnover.
Whether the total turnover for computing the deduction under 80HHE comprises only turnover from the assessee's computer software business or includes turnover from other business activities is the principal issue; the Board requests reporting of the computation method adopted by Assessing Officers and the views taken by appellate authorities.

Tax deduction from salaries: employer duties, estimation rules and allowable exemptions and reporting obligations for payroll withholding.
Rates and procedure for deduction of income-tax from salaries for 1995-96 under section 192 require employers to estimate gross salary including perquisites, allow specified deductions (standard deduction, Chapter VI-A) and applicable rebates, compute tax at prescribed slab rates, deduct monthly in equal instalments, remit using prescribed challans and TAN, issue Form No.16, and file annual returns; exemptions, perquisite valuation rules, aggregation of income where multiple employers exist, and penalties, interest and prosecution for non-compliance are explained.

Arrear demand entries to be captured on departmental software, printed in prescribed formats and updated annually on computers.
Directorate of Income-tax (Systems) provided a software package and operational instructions for computerised entry, data capture and backup of Arrear demand entries. Assessing Officers must have arrear demand entries as on 1st April 1995 captured on computers immediately, using Computer Centres or outsourcing. Captured entries are to be printed in two prescribed AD & CR formats (original sequence and alphabetical by assessee). Collections/reductions may be recorded manually during the year and must be updated on computers at the beginning of the next April. This instruction supersedes the earlier Board instruction.

Clearance procedure for government-related property transfers: NOC expedited after non-purchase undertaking.
Where Government or related organisations furnish an undertaking that properties "should not ordinarily be purchased" under Chapter XXC, the Appropriate Authority shall expedite grant of the No Objection Certificate in Form F.37 I and preferably issue the NOC within ten days from filing of Form F.37 I, to streamline clearance for transfers by or to Government, semi Government bodies, PSUs, housing boards and similar entities.

Tax deduction at source: TDS provisions do not apply to payments for voyages governed by section 172.
A separate voyage wise levy and recovery regime governs tax on shipping income of non residents, operating ship wise and journey wise and displacing general TDS provisions for payments related to such voyages. Agents acting on behalf of non resident ship owners or charterers are regarded as stepping into the shoes of the non resident principal, so the non resident shipping tax code applies rather than resident focused TDS rules for carriage or works contracts.