Circular No. 679 — 679 dated 11 2 1994

What this is

Circular No. 679 was issued by the Central Board of Direct Taxes on 11 February 1994. Its subject is 679 dated 11 2 1994.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Withdraws the Board's view that luxury tax forms part of room charges. Circular No. 645 dated 15 March 1993, read with Circular No. 650 dated 31 May 1993, had said that luxury tax and similar State taxes are part of 'room charges' for deciding whether the Expenditure Tax Act, 1987 applies to a hotel. The Income-tax Appellate Tribunal has since held to the contrary. On a fresh examination the Board accepts the Tribunal's view that luxury tax is not part of room charges under section 2(10) of the Expenditure Tax Act, and the two earlier circulars are withdrawn with immediate effect.

Why it was issued

The Tribunal gave a finding contrary to the Board's earlier view, and the Board re-examined the issue and decided to accept the Tribunal's view rather than contest it.

Who it reaches

Hotels near the room charge threshold under the Expenditure Tax Act, 1987
Hotels that had been treated as covered only because luxury tax was added in
Assessing Officers deciding applicability of the Expenditure Tax Act
Guests charged expenditure tax on that footing

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.2	s.2, s.346, s.355

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.

OTHER ACTS

EXPENDITURE TAX ACT, 1987
SECTION 2(10) l ROOM CHARGES
Clarification on applicability of the Expenditure Tax Act, 1987

1. The Board vide Circular No. 645, dated 15-3-1993 read with Circular No. 650, dated 31-5-1993 had clarified that luxury tax and such other taxes levied by the State Government will form part of the ‘room charges’ for the determination of applicability of the Expenditure Tax Act to any particular hotel.
2. The Income-tax Appellate Tribunal has recently given a finding contrary to the above view of the Board. After examination of the whole issue afresh, it has been decided to accept the view of the Income-tax Appellate Tribunal holding against inclusion of the luxury tax as a part of the ‘room charges’ under section 2(10) of the Expenditure Tax Act. The circulars of the Board referred above are accordingly being withdrawn with immediate effect.
Circular : No. 679, dated 11-2-1994.

What to watch

This is a circular under the Expenditure Tax Act, 1987, not the Income-tax Act.
The withdrawal is with immediate effect from 11 February 1994, so hotels assessed on the earlier view for prior periods had to take the point in their own proceedings.
It settles only whether luxury tax goes into room charges under section 2(10); other State levies are not separately dealt with beyond the withdrawal of the earlier circulars.
The circular does not name the Tribunal decision it accepts.

Where you meet it

In an expenditure tax assessment of a hotel where applicability turns on whether the room charge crossed the threshold.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 89/2026-CBDT [F. No. 164/1/2026-ITA-1] / SO 3936(E) — Ministry of Finance 17 July 2026
Notification No. 75/2026 [F. No. 275/18/2026-IT(B)] / SO 3610(E) : TDS Exemption on Ship Lease Payments to IFSC Units — 4 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 3 July 2026
Notification No. 74/2026 [F. No. 275/16/2026-IT(B)] / SO 3609(E) : TDS Exemption on Aircraft Lease Payments to IFSC Units — 4 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 3 July 2026
Notification No. 65/2025 [F. No. 300196/4/2019-ITA-I] / S.O. 2739(E) — Ministry of Finance 19 June 2025
Notification No. 56 /2025 [F.No.300164/4/2024-ITA-1] / SO 2576(E) — 2 the Gazette of INDIA : Extraordinary [Part Ii—sec. 3(ii)] 12 June 2025
Notification No. 52/2025 [F. No. 300164/5/2024-ITA-1] / SO 2447(E) — Ministry of Finance 30 May 2025

← Circular No. 680 · Circular No. 678 →

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.