Circular No. 166 — Financial Year 1975-76

What this is

Circular No. 166 was issued by the Central Board of Direct Taxes on 9 June 1975. Its subject is Financial Year 1975-76.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Widens the section 80FF education deduction as finally enacted by the Finance Act, 1975, beyond what the Board's earlier Circular No. 161 had described. The deduction is available not only for expenditure on the higher education of dependent children but also for such expenditure on a brother or sister of the assessee wholly or mainly dependent on him, and the qualifying courses now include business management along with medicine, architecture, engineering and technology. An assessee gets Rs. 1,000 for a dependent doing a degree or post-graduate course in business management and Rs. 500 for a dependent doing a diploma course in it. Where expenditure has been incurred on more than two dependents, the deduction is allowed for two of them as the assessee chooses.

Why it was issued

The Finance Act, 1975 as finally enacted extended the benefit beyond what the Board had set out in paragraph 2(7) of Circular No. 161 of March 1975, and the Board put the change before employers for the salary deduction for 1975-76.

Who it reaches

Salaried assessees paying for the higher education of children or dependent siblings
Employers computing salary deduction for the financial year 1975-76
Assessees with more than two dependents in higher education

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.80FF	no counterpart recorded

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

FINANCIAL YEAR 1975-76
Instructions for deduction of tax at source from salary during financial year 1975-76 at the rates specified in Part III of First Schedule to Finance Bill, 1975 and Finance (Amendment) Act, 1975
Attention is invited to para 2(7) of this Ministry’s Circular No. 161, dated 22-3-1975 [Clarification 1] relating to tax relief in regard to expenditure incurred on higher education of dependent children. The Finance Act, 1975 (as finally enacted) has extended the scope of this benefit. Deduction under section 80FF will be available not only in respect of expenditure incurred on the higher education of dependent children but also in respect of such expenditure incurred on any brother or sister of the assessee wholly or mainly dependent on him and extends to a course in business management in addition to that in medicine, architecture, engineering and technology. Further to what has been indicated in para 2(7) of this Ministry’s Circular No. 161, dated 23-3-1975, an assessee will be entitled to the higher deduction of Rs. 1,000 in respect of a dependent studying for a degree or post-graduate course in business management and a deduction of Rs. 500 in respect of a dependent studying for diploma course in business management. However, where the assessee has incurred expenditure on the higher education of more than two dependents, the deduction will be allowed only in respect of two such dependents as may be chosen by him.
Circular : No. 166 [F. No. 275/12/75-ITJ], dated 9-6-1975.

What to watch

The deduction stops at two dependents however many are studying, and the choice of which two is the assessee's.
A brother or sister must be wholly or mainly dependent on the assessee.
The amounts differ by the level of the course, Rs. 1,000 for a degree or post-graduate course and Rs. 500 for a diploma, on the business management limb.
Section 80FF is no longer in the statute, so this records the relief as it stood for those years.

Where you meet it

In the salary computation of an employee claiming education relief for the financial year 1975-76, and in an old assessment testing that claim.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

An assessee pays for a son doing a post-graduate course in business management, a daughter doing engineering and a dependent brother doing a diploma in business management. He may claim for two of the three as he chooses; taking the son and the daughter gives him Rs. 1,000 for the son on the business management limb and the relief admissible for the daughter's engineering course, and nothing for the brother.

← Circular No. 165 · Circular No. 164 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.