Cottage industry deduction permitted when members conduct manufacturing; incidental outside dyeing or transport does not bar the deduction.
Deduction under section 80P(2)(a)(ii) is available to a co-operative society engaged in a cottage industry if it meets conditions: small-scale operations, not requiring Factories Act registration, owned and managed by the society, activities carried on by members and their families without outside hired labour, members are shareholders, work may be at members' residences or a common society place, and the activity is manufacture, production or processing. Payments to outside agencies for dyeing, bleaching or transport do not by themselves disqualify a weavers' co-operative if weaving is done by members and other conditions are satisfied.

Computation of long-term capital gains tax: set-off of losses reduces taxable gains before flat-rate tax applies.
The circular clarifies that in computing tax under the statutory flat-rate mechanism for long-term capital gains, the Income-tax Act's set-off and aggregation rules are applied first so that losses from other heads reduce long-term capital gains; only the residual amount included in total income is taxable at the prescribed flat rate.

Tax deduction at source must apply under a single provision for each payment, not multiple sections.
Payments subject to tax deduction at source must be taxed under the single appropriate TDS provision applicable to that kind of payment; TDS sections operate exclusively so that where a payment falls within one provision, other provisions in the same Chapter do not apply simultaneously. Deductors must determine the character of each payment (for example, advertising work) and deduct tax only under the relevant head, preventing multiple provisions from being applied to the same payment.

Tax Deduction at Source on Salary: head or branch filing prevents duplicate returns, otherwise the Assessing Officer may enforce compliance.
Responsibility for salary tax deduction lies with the company, including its principal officer. If the head office or a branch files the return under the applicable provision, no other Assessing Officer may require duplicate filing; if no return is filed, the Assessing Officer with jurisdiction under the rules may enforce compliance with TDS obligations on salary.

Deduction of tax at source on rent applies to rent, non-refundable deposits and warehousing charges with specified exclusions.
Deduction of tax at source under section 194-I requires specified persons to deduct tax on income by way of rent at credit or payment, with the definition of rent covering any payment for use of land or buildings (including parts thereof) and deeming credits to suspense accounts as payee credits; administrative clarifications state that advances before the effective date are exempt, non-refundable deposits and warehousing charges attract deduction, refundable deposits do not, interest on deposits is covered by interest withholding rules, and tenant-borne municipal taxes are excluded.

Norm for disposal of recovery certificates lowered; tax recovery officers must meet and be assessed on the revised annual target.
The Board revised the annual disposal norm for Recovery certificates per Tax Recovery Officer, lowering the previous benchmark after a workload study, and directed that the new norm be communicated to all TROs and used to judge their performance.

Deduction of tax at source expanded to cover interest, professional fees and mutual fund unit income, increasing withholding obligations.
The Finance Act, 1995 enacts wide-ranging amendments to the Income-tax Act, 1961: it revises tax rates and exemption thresholds, expands deduction of tax at source to cover interest on time deposits, fees for professional and technical services and income of mutual fund unit holders, and introduces a special block assessment regime for undisclosed income detected by search. The Act also rationalises exemptions and tax holidays, tightens accounting and depreciation rules, enhances procedural powers for information gathering and surveys, and prescribes administrative changes for PAN allotment and tax audit compliance.

Tax deduction at source expanded to cover fees, contract payments, bank interest and mutual fund income; procedures for non deduction provided.
The Finance Act, 1995 expands Tax Deduction at Source to specified payments-including professional and technical fees, certain contract payments, interest on bank time deposits, and mutual fund/UTI income-and amends rules and forms accordingly. Taxpayers may apply to Assessing Officers for certificates of non-deduction or for deduction at a lower rate, or make declarations to payers where permitted. Assessing Officers are instructed to dispose of applications promptly, ensure forms are available at public counters, oversee deductors' payment and return obligations, and provide timely grievance redressal through specified administrative channels.

Tax deduction at source: guidance clarifying when advertising, contracts, rent, and services require withholding.
Clarification categorises payments to determine correct TDS provisions: advertising payments by clients to agencies attract section 194C at one per cent on the gross bill, agency payments to artistes fall under section 194J, direct payments to media are within section 194C (except where the media is non-taxable), hoarding and sponsorships are advertising works under section 194C, renting and subletting invoke section 194I, clearing/forwarding agents and couriers attract section 194C, routine maintenance contracts fall under section 194C while technical services fall under section 194J, reimbursements for actual expenses are excluded from TDS, unit income under section 194K covers periodic income distributions only, and interest on time/variable deposits is subject to section 194A at credit or payment.

Remedial action for revenue audit objections must be initiated universally; discontinuance on legal conflicts needs Board approval.
Remedial action must be initiated for all Revenue Audit objections as a precautionary revenue measure, and completed expeditiously where objections are accepted. Discontinuance is permissible by the Commissioner for incorrect factual objections, but issues of statutory interpretation or conflicting High Court decisions require prior Board approval with a reference to A&PAC and the Statement of Facts. Cases compliant with Board instructions should be referred to the Board for decision, and Board-directed remedial actions require a compliance report within three months.

TDS on advertising clarified: advertising payments taxed lower than other broadcasting work; professional fees treated separately.
The Finance Act, 1995 treats advertising and broadcasting/telecasting (including programme production) as "work" for tax deduction at source; payments for advertising used in print or electronic media are subject to the lower withholding rate for advertising, while other broadcasting and telecasting work without advertising attracts the higher work withholding rate. Payments for professional or technical services are deductible under the separate professional-fees provision, so fees paid to film artistes and similar professionals are subject to withholding as professional fees.

Tax deduction at source rules exclude TDS on individual passenger ticket sales; charter payments remain subject to deduction.
The Finance Act, 1995 broadened the scope of section 194C to cover contracts for carriage by modes other than railways. The Board clarified that payments for purchase of individual passenger tickets from airlines or travel agents are not subject to deduction under section 194C, whereas payments for chartering an aircraft for carriage of passengers or goods are taxable under that provision; the same distinction applies to other modes of transport.

Tax exemption for educational institutions does not require prescribed investment modes; separate rules govern charitable exemption applicants.
Income of an institution existing solely for educational purposes and not for profit is exempt from tax and such institutions are not required to invest their funds in the modes specified by provisions governing charitable trust investments. This clarification does not apply to institutions seeking exemption under the separate charitable-trust provisions, which remain subject to the applicable investment-mode requirements.

Convertible foreign exchange recognition: RBI/ECGC settlement bonds treated as convertible foreign exchange for section 80HHB relief.
RBI/ECGC bonds issued in settlement of unrealised claims of project exporters in Iraq will be treated as convertible foreign exchange for purposes of the tax incentive for profits from projects abroad because they substitute for funds realizable from Iraq and will be repatriated to India by EXIM Bank after lifting of U.N. sanctions; Chief Commissioner/Commissioner of Income tax may liberally allow extension of the six month period for bringing in convertible foreign exchange.

Perquisite on employee shares taxed when shares issued below market value; valuation depends on public offer parity and market price.
The Board treats shares issued to employees below market price as a perquisite. No perquisite arises for Government transfers or where employees are charged the same price as other shareholders/public. If employees receive shares at a lower price than other shareholders/public, the price difference is taxable as a perquisite. If offers are made only to employees, the perquisite value is the market price on the date of acceptance less the price paid by the employee.

Block assessment procedure for search cases mandates special-range jurisdiction, appraisal reports, prompt handover of seized material and reporting.
Block assessment procedure for search cases requires transfer of jurisdiction to Assistant or Deputy Commissioners (Special Range), centralized allocation in specified cities, timely notification by the ADIT to higher authorities, and preparation and forwarding of a detailed appraisal report within a prescribed period. The appraisal report must identify assessees, record search and limitation dates, summarize the basis of search, analyze disclosed income and incriminating entries, estimate undisclosed income with correlation to assets and expenditure, and propose follow-up. Seized material must be handed to the Assessing Officer and a separate register and quarterly reporting chain to the Board must be maintained.

Advance tax payment form change: three-counterfoil challans withdrawn and four-counterfoil forms introduced; previous photocopy exception preserved.
The Board withdraws three-counterfoil challan forms for payment of advance tax and self-assessment tax and replaces them with four-counterfoil forms; where three-counterfoil challans have been used, the previous provision permitting a taxpayer to enclose a photocopy of foil No. 3 with the return under section 139(9) continues to apply.

Entertainment expenditure: daily food allowance up to prescribed limit not treated as entertainment; excess taxable as employee income.
Expenditure up to Rs. 35 per day per employee on food or beverages provided during working hours shall not be treated as entertainment expenditure even if provided outside the place of work, provided the expenditure is genuine and reasonable; only the excess over Rs. 35 per day per employee will be treated as entertainment, and the amount is income in the hands of the employee under section 17. The instruction applies from financial year 1995-96 relevant to assessment year 1996-97 and subsequent years.

TDS on specified payments: withholding required and administrative relief measures for expedited non-deduction applications.
Deduction of tax at source is required on specified payments-professional and technical fees, certain contract payments for advertising/broadcasting/telecasting/transport and catering, interest on bank time deposits, and mutual fund or UTI unit payments-and administrative directions require liberal interpretation of TDS provisions, expedited disposal of non-deduction or lower-rate applications, wide availability of prescribed forms, prompt grievance redressal, and publicity of escalation channels to senior tax officials.

Refunds to non-resident employees may be issued to employers with the employee's authorization, following prescribed procedure.
Refunds for tax borne by employers for non-resident employees who have departed India may be paid to the employer if the non-resident gives authorization, subject to the procedures in Circular No. 285. The Board relies on the statutory agent concept, whereby a person through whom a non-resident receives income can be treated as the non-resident's agent, permitting the company to file returns, be assessed in its name and claim the refund.