Quarterly statement of I.T. Demand in Arrears revised; new proforma and source records effective next quarter.
The proforma for the quarterly statement is replaced by the quarterly statement of I.T. Demand in Arrears, to be used from the quarter ending 31.3.78, and prescribed source records (Annexes II and III) are to be implemented from 1.4.78. The statement must show all outstanding demands-arrear and current-for corporation tax (excluding Super Profits Tax and surtax), Super Profits Tax and surtax, and income tax on non-company assessees, with separate entries for Annuity Deposit and EPT/BPT arrears, and is to be compiled pursuant to DOMS guidelines circulated by the Directorate.

Valuation of shares in companies with agricultural assets must not be excluded from an assessee's net wealth under wealth tax rules.
Shares held by an assessee in companies owning agricultural assets must not be treated as agricultural assets for exclusion from the assessee's net wealth; when valuing such shares the company's agricultural assets should not be separately excluded. The Board has observed incorrect exclusions by field officers and directs reissuance of instructions to ensure inclusion of the share value in net wealth computations.

Business connection: in-country operations must be shown to tax non-resident under deeming provision; prior instruction withdrawn
The Supreme Court held that services made available abroad by a foreign company do not amount to business carried on in India and that to attract the deeming provision the Department must prove some operations were carried out in India; absent such finding the provision is not attracted. The Board withdrew the prior instruction treating entire receipts as Indian-sourced and directed continuation of the practice of taxing non-residents only on profit attributable to operations in India, with concessions or withdrawals of appeals where reopenings relied on the Madras High Court view.

Administrative responsiveness: tax officers must acknowledge and inform assessees of action or delay on requests.
Income-tax Officers must give prompt attention to assessees' written requests for adjustment of tax paid, rectification of mistakes, or refunds; where immediate action is possible notify the assessee of steps taken, and where not possible inform the assessee that necessary action will be taken in due course, fulfilling a communication obligation to avoid hardship and uncertainty.

Delegated printing powers affirmed for tax commissioners; withdrawal OM not applicable and printing charges exclude paper costs.
Delegated local printing powers granted to Commissioners of Income-tax and Directors of Inspection are not affected by the Director of Printing's Office Memorandum; the delegations remain operable. The delegated printing authority covers only printing charges and expressly excludes the cost of paper and stationery, and past expenditures should be reviewed accordingly.

Concealment under Explanation to penalty provision: Supreme Court said questions of law may require Tribunal references.
The Supreme Court found that Tribunal conclusions about concealment under the Explanation to the penalty provision raised questions of law warranting a statement of case under the departmental reference procedure, despite recurring Tribunal practice of treating such matters as questions of fact; the decision may guide framing departmental reference questions where repeated estimated assessments, wide discrepancies between returned and assessed incomes, excess self-assessments and similar payments are relied upon to allege concealment.

Tax Deduction at Source compliance: employer return failures and enforcement lapses prompt directive for stricter controls.
Noncompliance in administration of Tax Deduction at Source from salaries was identified, including failures to receive employer monthly and annual returns on time, absence or improper maintenance of prescribed watch registers (ITNS-118), lack of reconciliation between annual returns and challans, failure to act on non-deduction or non-deposit of tax, and failure to withdraw prior permissions for quarterly payments where applicable; Commissioners are directed to enforce timely collection, maintain registers, reconcile records, take action against defaulting employers, and provide guidance to employers through designated ITOs.

Charitable trust donations preserve tax exemption when paid to other trusts for their charitable objects.
Payments by a donor charitable trust to another trust for utilisation by the donee trust towards its charitable objects constitute a proper application of income by the donor and do not cause the donor trust to lose exemption under section 11 in the year of receipt, provided the payment is for the donee trust's charitable objects.

Special circles centralisation: ensure professionals' and contractors' tax cases are centralized, investigated thoroughly and not handled routinely.
Commissioners must organise and expand special circles for professionals and contractors, centralise all relevant cases, and broaden coverage to include architects, engineers and contractors. Inspecting Assistant Commissioners must supervise surveys, guide assessing officers, and ensure important or suspected tax evasion cases receive detailed investigation rather than routine treatment; Summary Assessment Scheme cases remain summary. Commissioners must submit prescribed evaluation reports to the Director of Inspection (Income tax & Audit) by the annual deadline and send a compliance report to the Board.

Short-term capital gains arise when land integral to a building is sold as part of that composite asset within the applicable holding period.
Where land appurtenant to a building cannot be severed and forms an integral part of the building, the land becomes part of the building and the construction brings into existence a distinct asset - house property/building (building and land appurtenant thereto) - on completion. The character of gains on sale of that composite asset is governed by the period for which the composite asset is held; sale within the prescribed short-holding period results in short-term capital gains.