December 19, 1985

Dr. Elliot M. Gross, whose conduct as the New York City Chief Medical Examiner has been the subject of city and state inquiries for almost a year, was returned to office yesterday by Mayor Koch. The Mayor's decision means that Dr. Gross, who has been on his second paid leave of absence for nearly five months, is again the city administration's top pathologist. He will remain so, the Mayor said, unless he is found guilty of charges by the State Health Department of gross negligence or incompetence. The Mayor acted less than a week after the State Health Commissioner had recommended that the charges -set aside on procedural grounds by an administrative law judge - be reinstated and judged on their merits. 'Time Has Come' ''He's been through the fires of hell,'' Mr. Koch said of Dr. Gross at a City Hall news conference that had been scheduled with little notice. ''How long do you keep the guy roasting?''

Congress today approved two measures that together form the most sweeping alteration in Government farm policy since the Depression. The first bill would reduce Government income and price supports to farmers for the first time since the program was established in 1933. The second would reorganize the nation's farm credit system and bolster it by allowing tens of thousands of farm foreclosures. Together the measures provide a framework for agriculture, the nation's largest industrial sector, for the rest of the decade.

The State Senate's Republican leadership today proposed a broad tax-cut plan that it said would save taxpayers $3.9 billion over five years. The plan would eliminate the state sales tax on articles of clothing sold for under $75. It would increase the state income tax's individual personal exemption - now at $900 - to $1,000 for an adult and $1,200 for each dependent child. The program would also allow both homeowners and renters to receive a credit against their state income tax for a portion of school property taxes. It would reduce corporate income taxes, particularly for small businesses, and taxes for retired people whose main source of income is from investments.

As the holiday shopping pace intensified this week, curious throngs gathered outside the sparkling 34th Street tower that is Herald Center. They watched as clowns juggled, a break dancer cavorted and a young woman blew bubbles in the front window of the city's first vertical shopping center devoted exclusively to retailing. However, few in the sidewalk audience seemed to head inside to shop. Herald Center opened eight months ago in the heart of Manhattan's central shopping district to a surge of visitors eager to see the top-scale stores and trendy restaurants. Among the stores they found were Ann Taylor, Brookstone, Caswell-Massey, Alfred Dunhill of London and Furs by Peter Thomas, but they also discovered that only about half the center was occupied.

The former head of fund raising for the American Cancer Society's New York City branch was indicted yesterday for masterminding a scheme that enabled contributors to take nearly $4 million in illegal tax deductions. Federal officials said contributors made out checks to the Cancer Society and then received cash kickbacks for 90 percent of the amount of the checks. The contributors could deduct the full amounts on their income-tax returns, using the canceled checks to back their claims. The indictment, by a Federal grand jury, was announced by Rudolph W. Giuliani, the United States Attorney in Manhattan.