Circular No. 444

1332. Central Government Special Deposit Scheme extended - Reinvestment by recognised funds - Part A of Fourth Schedule read with rule 67(2)(ii) of Income-tax Rules

What this is

Circular No. 444 was issued by the Central Board of Direct Taxes on 13 December 1985. Its subject is 1332. Central Government Special Deposit Scheme extended - Reinvestment by recognised funds - Part A of Fourth Schedule read with rule 67(2)(ii) of Income-tax Rules.

This amends the Income-tax Rules. What it changes is the Rules, not the Act — and a rule can never take away what the section gives.

What it does

Permits recognised funds to reinvest maturing deposits in the Central Government Special Deposit Scheme. Rule 67(2) of the Income-tax Rules, as it stood before its substitution with effect from 1 April 1986, allowed recognised provident, superannuation and gratuity funds to invest in that Scheme up to thirty per cent of investible moneys. The Scheme, which was to run only till 30 June 1985, was extended for a further ten years by a notification of 12 June 1985, and the Board decides that deposits maturing and falling due for repayment from 1 July 1985 onwards may be reinvested by the funds in the Scheme. The thirty per cent limit is unchanged.

Why it was issued

The Special Deposit Scheme had been extended for another ten years, and the funds needed to know whether maturing deposits could go back into it.

Who it reaches

Trustees of recognised provident funds
Trustees of approved superannuation and gratuity funds
Employers whose funds hold Special Deposit Scheme deposits

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.

1332. Central Government Special Deposit Scheme extended - Reinvestment by recognised funds - Part A of Fourth Schedule read with rule 67(2)(ii) of Income-tax Rules
Attention is invited to rule 67(2)(iv) [as stood before its substitution by the Third Amendment Rules, 1986 with effect from 1-4-1986] of the Income-tax Rules, 1962 which, inter alia, provided that the recognised provident, superannuation and gratuity funds can make investment in the Central Government Special Deposit Scheme up to an amount not exceeding 30 per cent of the investible moneys. Special Deposit Scheme which was in force till 30-6-1985 has been extended for a further period of 10 years vide Notification No. 16(8)-PD of 1984 dated 12-6-1985. It has, therefore, been decided that maturing deposits falling due for repayment from 1-7-1985 onwards may be reinvested by the funds in the Central Government Special Deposit Scheme. However, the existing limit of 30 per cent remains unchanged.
Circular : No. 444 [F. No. 215/41/85-IT(A-II), dated 13-12-1985.

What to watch

The permission is to reinvest, and the thirty per cent of investible moneys ceiling stays as it was.
It applies to deposits falling due for repayment from 1 July 1985 onwards.
The investment pattern rule for recognised funds was substituted with effect from 1 April 1986 and has been recast several times since, so the permitted modes and proportions must be read from the rule in force for the year in issue.

Where you meet it

In an examination of a recognised fund's investment pattern, where recognition or the exemption of its income turns on compliance with the prescribed modes.

What it names

Rules it names. Rule 67 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.

← Circular No. 443 · Circular No. 442 →

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.