Search disclosures: declaring and paying tax on unaccounted assets during search prevents concealment penalty under rules.
If unaccounted assets are found in the course of a search, no concealment penalty applies provided the person searched makes a search-statement that the assets were acquired out of income of the year for which return was not yet filed, specifies how the income was derived, pays the tax and interest due, and the period "in the course of the search" includes times when lockers or godowns are under a restraint order; authorised officers must notify searched persons and correctly record such statements.

Write-off of irrecoverable income-tax arrears: delegated approvals require zonal committee recommendations and prior board consent for higher amounts.
Administrative approval for write-off of irrecoverable income-tax arrears is allocated by monetary bands to specified authorities; Commissioners may write off amounts below a mid threshold with zonal committee recommendation, while write-off at or above the mid threshold requires prior central approval based on a proposal recommended by a three-member zonal committee. Interest charged under tax recovery provisions must be calculated and included in the arrears total when considering write-off. In charges with a Chief Commissioner, the Chief Commissioner may write off arrears within an enhanced mid-range band subject to zonal committee recommendation; otherwise existing Board instructions and procedures govern the process.

Automatic transfer of income tax files allowed for assessees with salary, property, securities and other income without officer consent.
Previously, transfers of income tax files required identification and consent via specified intra and inter CIT routing, with CIT I bearing responsibility for obtaining transferee consent. The Board concluded that where an assessee's income is from salaries, property, interest on securities and other similar sources, file transfers occasioned by change of residence or business should proceed automatically without prior consent of the transferee Income tax Officer.

Voluntary tax compliance encourages liberal treatment of repentant taxpayers while preserving penalties for continued evasion.
Where a taxpayer's high Advance Tax estimate reflects accumulated untaxed income of prior years, officers should treat voluntary declarations sympathetically and avoid reopening earlier assessments unless material in their possession affirmatively shows past evasion that cannot be accounted for by the taxpayer's current-year estimates; this liberal approach is principally applicable where concealment in earlier years is not evidenced by tangible assets.

Conveyance allowance exemption permitted when employer certifies allowance was incurred wholly and exclusively for official duties.
Exemption under 10(14) for additional conveyance allowance is permitted where the employer appends a salary-certificate certifying that the allowance was granted specifically for expenditure wholly, necessarily and exclusively for performance of duties and was actually incurred, supported by an internal verification system recording individual expenditure, vehicle type, area of operation and performance details.

Rule nisi: petition granted unless respondent shows cause on return date; clarifies common court technical terms.
The instruction defines key court procedural expressions: Rule nisi-petition granted unless respondent shows cause on the fixed date; Rule made absolute-petition granted; Rule discharged-show-cause rule revoked and petition not granted; Rule issued-petition granted. These definitions are provided for uniform usage by departmental officers in admitting and disposing of petitions.

Constitution of Tax Bench on continuous basis urged; request establishment of dedicated judicial benches and reporting of outcomes.
Constitution of a Tax Bench on continuous basis is requested to address heavy case pendency; officers are directed to approach the judicial head to seek continuous or dedicated tax bench sittings and to inform the Board of the results of those meetings.

Stay of recovery disfavoured in tax matters; authorities instructed to seek vacation of stays and list stayed cases.
High Courts and the Supreme Court lack authority to grant stay of recovery in income-tax matters; interim orders should not be routinely granted on a prima facie showing. The Board directs immediate action to seek vacation of such stay orders to protect revenue, requiring officers to list cases where recovery of outstanding demand exceeds the specified threshold and to report the action taken by the stated deadline.

Agreement on Merchant Shipping: termination notice withdrawn, agreement remains operative and prior instruction rescinded.
The notice of termination of the Agreement on Merchant Shipping between India and Bulgaria has been withdrawn, the Gazette notification relating to the Agreement remains operative, and Instruction No. 1721 dated 1 August 1986 is rescinded; officers are to be informed.

Section 10A exemption covers processing and assembling of imported components for export; do not reopen assessments.
The Board interprets the scope of the section 10A exemption to include Free Trade Zone industrial undertakings engaged in processing and assembling imported components for export, and directs that completed assessments not be re-opened and pending appeals be conceded accordingly.

Amnesty scheme extension confirms conditions apply to returns of income and wealth for the current and earlier assessment years.
The Circular amends the concluding sentence of Circular No. 472 to state that the conditions laid down in the earlier circulars will apply to returns of income and returns of wealth for the assessment year 1986-87 and for earlier assessment years, thereby confirming the temporal scope of the amnesty scheme under the Income-tax and Wealth-tax Acts.

Reporting of searches: count searches by warrants, immediate telex for locker openings and seizures, and twenty four hour notice.
Require reporting of searches by number of warrants only; send telex when a bank locker is opened and inventorized; promptly telex seizures of cash or jewellery; and ensure the preliminary telex to the Board Member (Investigation) is sent within twenty-four hours, with strict compliance and circulation to all A.DsI/D.DsI.

Cash Compensatory Support treated as trading receipt for tax purposes, prompting conflicting appellate positions and administrative attention.
The tax treatment of Cash Compensatory Support paid to exporters is contested: one appellate bench characterised such payments as non-taxable, while another appellate bench treated them as taxable trading receipts, the latter relying on a High Court judgment that supports treating the payment as part of taxable business receipts.

Tax rate on foreign-company interest income from foreign-currency remittances is applied on gross interest without deductions.
Where a foreign company invests by remittance in foreign currency in NRE/FCNR accounts or in deposits of public limited companies, the special rate provision applies and tax on interest is charged on the gross amount without allowing any deduction for expenditure or allowances.

Reporting obligations for tax recovery units require consolidated monthly and quarterly plan submissions and central chargewise review by DI(Recovery).
All Commissioners must submit a consolidated Monthly Progress Report of TROs' work to D.I.(Recovery) by the 25th of the succeeding month and endorse quarterly Action Plan feedback to D.I.(Recovery). The D.I.(Recovery) will conduct a chargewise review and forward findings/comments to the Board's ITCC/IT(B) sections according to prescribed submission dates, with strict adherence required.

Amnesty scheme extension under Income-tax and Wealth-tax Acts extends benefits through March, with prior conditions unchanged.
Extension of an existing amnesty scheme under the Income-tax Act and the Wealth-tax Act, with the period extended to permit further participation. The circular confirms that the operative conditions set out in earlier administrative circulars continue to apply to returns of income and wealth for the relevant assessment year, preserving the eligibility criteria and procedural requirements during the extended period.

Construction for capital gains treatment where authority undertakes building and allottee holds title on allotment letter.
Investment in a flat allotted under the Self financing Scheme of the Delhi Development Authority is to be treated as construction for capital gains exemption purposes because the allottee obtains title on issuance of the allotment letter, the DDA performs construction on behalf of the allottee, instalment payments are secondary obligations, and the tentative cost of construction determined under the Scheme constitutes the cost of the new asset; the instalment mechanism does not change the transaction's character.

Interest on deposits under section 33(1)(g) may be allowed up to the date of refund, per administrative circular.
The Board directed that interest at the rate of 2% per annum may be allowed on deposits made under clause (g) of sub-section (1) of section 33 of the Estate Duty Act up to the date of refund; this instruction implements the earlier refund directive to depositors surviving on March 16, 1985 and is communicated to Commissioners of Income-tax and the Controller of Estate Duty.

Depreciation on blocks of assets introduced, altering depreciation calculation and capital gains treatment for asset transfers.
The amending Act replaces asset by asset depreciation with a block of assets regime, prescribes accelerated rates for blocks, omits various initial and terminal depreciation provisions, and instructs that proceeds from sale or disposal reduce block written down value. It substitutes section 50 to treat excess consideration or the cessation of a block as deemed short term capital gain or loss, sets transitional written down value rules, and makes consequential amendments to related provisions.

Time limit for Form 37 I filing extended to permit belated compliance without punitive action within the specified extension.
Government directed that no punitive action be taken for belated compliance with Rule 48L(2)(a) requiring statements in Form No. 37 I relating to transfers of immovable property before 16 10 1986, provided the statement is furnished on or before 15 11 1986, in view of the recent commencement of Chapter XXC and intervening holidays.