This appeal by assessee relates to asst. yr. 1976-77. assessee is non-resident shipping company, incorporated in United Kingdom. Prior to asst. yr. 1976-77, assessee was being assessed in accordance with directions contained in Circular No. 7 of 1942, issued by CBDT. That circular allowed British shipping company to elect to b e assessed on basis of ratio certificate granted by UK authorities regarding income or loss and wear and tear allowance. Sec. 44B which was inserted in IT Act, by Finance Act, 1975, with effect from asst. yr. 1976-77, made special provision for computing profits and gains of shipping business in case of non-residents. contention of assessee before ITO was that since said circular had not been withdrawn by Board, it was binding on assessing authorities, with result that assessing authorities were bound to follow directions in said circular for assessment of British shipping companies, even for asst. yr. 1976-77, inspite of insertion of s. 44B in IT Act, 1961, w.e.f. that assessment year. According to assessee, provisions of s. 44B would not be applicable, in view of fact that said circular had not been withdrawn. This contention was not accepted either by ITO or CIT(A). According to CIT(A), Board s circular had laid down manner of computing income with view to avoiding unnecessary disputes at time when there was no statutory fixed mode of determination of such income. circular had not been issued with intent to override any statutory provision. Since specific provision for computation of income of non-resident shipping companies had been made by insertion of s. 44B of Act, directions given in that circular could not be applied. He further observed that when officer had option to make assessment by one of two modes, directions given in circular for adopting one of two modes in specific cases would be binding on assessing authorities, but when, as here, was no option to assessing authorities in view of insertion of specific statutory provision, directions in earlier circular would not be applied. assessee has now come in appeal before us and main contention on behalf of assessee is that since circular has not been withdrawn, it is binding on assessing authorities notwithstanding insertion of s. 44B in Act. Reliance is placed on certain decisions which shall be considered subsequently. contention on behalf of department is that in view of subsequent insertion of specific provision on subject in s. 44B of Act, circular in question should be deemed to have been rendered ineffective. He drew our attention to circular No. 169 dt. 23rd June, 1975 and contended that said circular should be deemed to have rendered previous circular ineffective. We have considered rival submissions and facts on record. We find that prior to coming into force of s. 44B as well as amendment of s. 172 made by Finance Act, 1975, taxable profits of foreign shipping enterprises were determined by suitably apportioning their profits between their Indian business and foreign business or on basis of "voyage accounts". Sec. 44B reads as follows: "44B. (1) Notwithstanding anything to contrary contained in ss. 28 to 43A in case of assessee, being non-resident engaged in business of operation of ships, sum equal to seven and half per cent of aggregate of amounts specified in sub-s. (2) shall be deemed to be profits and gains of such business chargeable to tax under head "profits and gains of business or profession." (2) amounts referred to in sub-s. (1) shall be following, namely: (i) amount paid or payable (whether in or out of India) to assessee or to any person on his behalf on account of carriage of passengers, livestock, mail or goods shipped at any port in India; and (ii) amount received or deemed to be received in India by or on behalf o f assessee on account of carriage of passengers, livestock, mail or goods shipped at any port outside India." Circular No. 7 of 1942 permitted British shipping company to be assessed on basis of ratio certificates granted by UK authorities regarding income or loss and wear and tear allowance. Provisions of s. 44B override provisions of ss. 28 to 43A, which includes s. 32 providing for depreciation allowance. Provisions of s. 44B are applicable to all non-resident assessee engaged in business of operation of ships. It does not make any distinction between British company ad any other non-resident company. That distinction has been provided in Circular No. 7 of 1942. But since special provision has been made for computation or profits and gains of assessee, who is non-resident and who is engaged in business of operation of ships, provisions of earlier circular, which contained directions of altogether of different nature, must be deemed to have been superseded. Certainly, circular issued by Board would be binding on all officers and persons in execution of Act, but no instructions of circular can go against provisions of Act. Board can, no doubt, relax rigour of existing law or grant relief which is not to be found in terms of statute and such circulars would be considered as circulars making for just fair administration of law as it exists on date of circular. However, when specific statutory provision is subsequently inserted in Act, earlier circular cannot override those provisions. In view of this legal position, we are unable to accept contention of ld. counsel for assessee to effect that Circular No. 7 of 1942 would be binding on assessing authorities even after insertion of s. 44B by Finance Act, 1975. We, however, find that Circular No. 169 dt. 23rd June, 1975 contains elaborate directions regarding manner in which assessment of non- resident assessees engaged in business of operation of ships should be made after insertion of s. 44B in IT Act, 1961, and amendment to s. 172 thereof. These instructions do not make distinction between British shipping company and any other non-British shipping company. These instructions must be deemed to have superseded earlier instructions contained in Circular No. 7 of 1942. Consequently, even if circular of 1942 may not have been withdrawn by express direction to that effect, yet, in view of subsequent circular, it must be held to have been impliedly withdrawn. ld. counsel for assessee invited our attention to provisions of s. 297(2)(a) of IT Act, 1961. It has been mentioned therein that notwithstanding 297(2)(a) of IT Act, 1961. It has been mentioned therein that notwithstanding repeal of Indian IT Act, 1922, any direction or instructions issued under any provisions of repealed Act shall, so far as are not inconsistent with corresponding provisions of new Act, be deemed to have been made or given under corresponding provisions aforesaid and shall continue in force accordingly. Accordingly to ld. counsel for assessee, since Circular No. 7 of 1942 had been issued under s. 5(8) of IT Act, 1922, that circular continued to be in force after IT Act, 1961, came in force, because there was corresponding provision for s. 5(8) of old Act in s. 119(1) in new Act. His further contention was that no subsequent amendment in IT Act, 1961, would render said circular ineffective and that only way in which said circular could be rendered ineffective was by express withdrawal of said circular. We are unable to accept this contention of assessee. As indicated by us, circular can be withdrawn either expressly or by implication. When new statutory provision is inserted in Act, which is contrary to directions given in circular issued prior to insertion of said provision, circular in question must be deemed to have been withdrawn by implication. Consequently, in present case, insertion of s. 44B had effect of rendering Circular No. 7 of 1942 ineffective. We shall now consider three decisions on which k reliance in placed by ld. counsel for assessee. first decision is that of Navnitlal C. Jhaveri vs. K.K. Sen, AAC (1965) 56 ITR 198 (SC). What all that has been laid down in that decision is that circular issued by Board would be binding on all officers and persons in execution of IT Act under s. 5(8) of old Act of 1922. It does not lay down that such circulars would be binding even when contrary provision is made in statute subsequently after issue of said circular. next decision on which reliance is placed on behalf of assessee is that of Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71: (1971) 82 ITR 913 (SC). It is necessary to give factual background of that case in order to understand ratio of that decision. Under r. 33 of IT Rules, 1922, there were three alternate basis on which income of non-resident shipping company would be computed for levy of income-tax in India. first was on basis of such percentage of turnover as ITO might consider reasonable; second was on basis of amount which bore same proportion to total profits of business as receipts so accruing or arising bore to total receipts of business; third basis was such other manner "as ITO may deem suitable." Supreme Court in that case held that computation of profits in that case had been made on basis of third alternative given in r. 33. Court observed that while making assessment on that basis ITO was bound t o follow instruction contained in circular of Board. contention was raised before Supreme Court to effect that since after issue of said circular, proviso had been added to s. 10(2)(vi-b) of IT Act, 1922, instructions need not be strictly complied with. Court observed that, in circumstances of case, fact that proviso to s. 10(2)(vi-b) was incorporated in Act of 1922, after Board had issued its instructions, did not affect either validity or r. 33 of instructions issued by Board. reason given by Supreme Court in this observation was that neither r. 33 nor instructions issued by Board were strictly in accordance with s. 10(2); they merely laid down certain just and fair methods of approach to difficult problem. It would, thus, be seen that even after insertion of that proviso, r. 33 still remained in force and that rule still gave option to ITO to make assessment on any one of three modes prescribed in r. 33. instructions in Circular of Board pertained to mode of assessment in r. 33. There was no amendment in r. 33 so as to render any part of instructions ineffective. It was in these circumstances that Supreme Court held that addition of proviso did not affect either validity, or r. 33 or force of instructions. It may be noted that instructions in question had been given in order to soften rigour of law as was in force at that time and to simplify otherwise complicated task of assessment of profits of non-resident shipping companies. There was nothing in subsequently added proviso which rendered assessment in accordance with r. 33 nugatory. aforesaid decision of Supreme Court is of no assistance in present case. This is because provision contained in subsequently inserted s. 44B of Act of 1961 was materially inconsistent with method prescribed in r. 33 of IT Rules, 1922. On account of said provision, three alternate modes of assessment came to end. In these circumstances, Circular of 1942 cannot have effect after insertion of s. 44B in Act of 1961. third decision on which reliance is placed is that of K. P. Varghese vs. ITO (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC). It was laid down in that decision that two Circulars of Board issued on 7th July, 1964 and 14th Jan., 1974 explaining scope and objection of s. 52(2) were binding on department in administration and implementation of s. 52(2) of Act. It was observed: "These two circulars........are, as we shall presently point out, binding on tax department in administration or executing provision enacted in sub-s. (2), but quite part from their binding character, they are clearly in nature of contemporanea expositio furnishing legitimate aid in construction of sub-s. (2)". This decision is no authority for pro-position that earlier circular is binding on assessing authorities even after contrary provision is made in Act by subsequent amendment. Considering all circumstances, we hold that profits of assessee were liable to be determined in accordance with provisions of s. 44B of Act. In result, appeal fails and is dismissed. *** ANCHOR LINE LTD. v. INCOME TAX OFFICER