Section 44B overrides earlier shipping circulars and requires uniform profit computation for non-resident shipping businesses.

Section 44B introduced a special and overriding code for computing profits of non-resident shipping businesses, and it applied uniformly to all such assessees. An earlier administrative circular permitting a different method for British shipping companies could not survive once it became inconsistent with the later statutory scheme, because a circular binds the department only while it accords with the Act. The later circular of 23-6-1975 also reflected that the new regime had superseded the earlier instructions. Section 297(2)(a) did not preserve the old circular beyond the point of inconsistency. The assessee's profits were therefore required to be computed under section 44B.

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Issues: Whether Circular No. 7 of 1942 continued to bind the assessing authorities after insertion of section 44B of the Income-tax Act, 1961, and whether the assessee's profits had to be computed under section 44B notwithstanding the earlier circular.

Analysis: The circular of 1942 had permitted a special method for British shipping companies at a time when no specific statutory scheme governed computation of their profits. Section 44B, inserted with effect from assessment year 1976-77, created a special and overriding code for non-resident shipping businesses and applied uniformly to all such assessees, without distinction between British and other foreign shipping companies. A circular may bind the department only so long as it is consistent with the Act, and an earlier administrative instruction cannot survive a later provision that is materially inconsistent with it. The later circular of 23-6-1975 also indicated that the new statutory regime under section 44B had superseded the earlier instructions. Section 297(2)(a) did not assist the assessee because the saving of old instructions operates only so far as they remain consistent with the corresponding provisions of the 1961 Act.

Conclusion: The earlier circular did not continue to operate after insertion of section 44B, and the assessee's profits were required to be computed under section 44B. The issue is decided against the assessee.

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