Circular no 7 /2009
F. No 500/135/2007-FTD-I
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated 22nd Oct, 2009
Sub: Withdrawal of Circulars No 23 dated 23rd July, 1969, No 163 dated 29th May,
1975 and No 786 dated 7th February, 2000
The Central Board of Direct Taxes had issued Circular No 23 (hereinafter called
“the Circular”) on 23rd July 1969 regarding taxability of income accruing or arising
through, or from, business connection in India to a non-resident, under section 9 of the
Income-tax Act, 1961.
2. It is noticed that interpretation of the Circular by some of the taxpayers to claim
relief is not in accordance with the provisions of section 9 of the Income-tax Act, 1961 or
the intention behind the issuance of the Circular.
3. Accordingly, the Central Board of Direct Taxes withdraws Circular No 23 dated
23rd July, 1969 with immediate effect.
4. Even when the Circular was in force, the Income-tax Department has argued in
appeals, references and petitions that-
(i) the Circular does not actually apply to a particular case, or
(ii) that the Circular can not be interpreted to allow relief to the taxpayer which is
not in accordance with the provisions of section 9 of the Income-tax Act or
with the intention behind the issue of the Circular.
It is clarified that the withdrawal of the Circular will in no way prejudice the aforesaid
arguments which the Income-tax Department has taken, or may take, in any appeal,
reference or petition.
5. The Central Board of Direct Taxes also withdraws Circulars No 163 dated 29th
May, 1975 and No 786 dated 7th February, 2000 which provided clarification in respect
of certain provisions of Circular No 23 dated 23rd July, 1969.
(Kamlesh C. Varshney)
Secretary, Central Board of Direct Taxes