Circular No. 228 — Financial Year 1977-78

What this is

Circular No. 228 was issued by the Central Board of Direct Taxes on 14 July 1977. Its subject is Financial Year 1977-78.

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

Forwards to Commissioners a draft circular letter with the rates at which income-tax and surcharge are to be deducted from interest on Government securities after 17 June 1977, in continuation of Circular No. 215 dated 31 March 1977, and asks that a circular on that basis be issued immediately to every Treasury Officer and Sub-Treasury Officer individually.

Why it was issued

The annual instruction for financial year 1977-78, so that treasuries paying interest on Government securities deducted at the rates in Part III of the First Schedule to the Finance Bill, 1977 from the stated date.

Who it reaches

Commissioners who had to issue the circular in their charges
Treasury and Sub-Treasury Officers paying interest on Government securities
Holders of Government securities suffering deduction in financial year 1977-78

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 1977-78
Instructions for deduction of tax at source from interest on securities during financial year 1977-78 at the rates specified in Part III of First Schedule to Finance Bill, 1977

1. In continuation of this Department’s Circular : No. 215 [F.No. 275/21/77-IT(B)], dated 31-3-1977 [clarification 2], a copy of the draft circular letter setting out the rates at which income-tax and surcharge should be deducted from interest on Government securities after June 17, 1977 is forwarded herewith.
2. A circular on the basis of this draft may please be issued immediately to all Treasury Officers and Sub-Treasury Officers under your control individually.
Circular : No. 228 [F.No. 275/21/77-IT(B)], dated 14-7-1977.

What to watch

The rates themselves are not in the text supplied — only the covering instruction forwarding the draft is before you.
Whatever rates were forwarded speak for financial year 1977-78 alone.
The rates were drawn from a Finance Bill and so were subject to what Parliament enacted.
Deduction on the new footing was to run from 17 June 1977, so payments earlier in the year stood on the previous basis.

Where you meet it

In an old treasury TDS record for financial year 1977-78 where the rate applied on Government security interest is in question.

← Circular No. 226 · Circular No. 225 →

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.