Tonnage Taxation - Section 115V, 115VA, 115VB, 115VC, 115VD - Income Tax - Ready Reckoner - Income Tax

Meaning of certain expressions used in computing income under special provisions relating to income of Shipping Companies - Section- 115V Fishing vessel shall have the meaning assigned to it in clause (12) of section of the Merchant Shipping Act, 1958 ; Qualifying company means a company referred to in Section 115VC ; Qualifying ship means a ship referred to in Section 115VD ; Tonnage income means the income of a tonnage tax company computed in accordance with the provisions of this Chapter; Tonnage tax activities means the activities referred to in sub-sections (2) and (5) of Section 115V-I ; Tonnage tax company means a qualifying company in relation to which tonnage tax option is in force; Tonnage tax scheme means a scheme for computation of profits and gains of business of operating qualifying ships under the provisions of this Chapter. Computation of profits and gains from the business of operating qualifying ships Section 115VA It is optional for a qualifying company, for the income from the business of operating qualifying ships, to compute its income as per tonnage tax scheme, or to compute its income as per normal provisions of the Act. It is an optional scheme, but once the option is exercised there is a lock-in period of 10 years. If a company opts out of this scheme, it is debarred from re-entry to this scheme for 10 years. A company owing at least one qualifying ship may opt for the scheme. The business of qualifying ship is to be considered as a separate business and separate accounts are to be maintained for such business. The profits of business of operating qualifying ship will not be taken into consideration for the purpose of MAT provisions. Operating Ships Section 115VB A company shall be regarded as operating a ship if it operates any ship whether owned or chartered by it and includes a case where even a part of the ship has been chartered in by it in an arrangement such as slot charter, space charter or joint charter. However, a company shall not be regarded as the operator of a ship which has been chartered out by it on bareboat charter-cum-demise terms or on bareboat charter terms for a period exceeding 3 years. Qualifying Company Section 115VC A company is a qualifying company if: It is an Indian company; The place of effective management (i.e., where decision take place) of the company is in India; It owns at least one qualifying ships; and The main object of the company is to carry on the business of operating ships. Qualifying Ship Section 115VD A ship is a qualifying ship if - It is a sea going ship or vessel of 15 net tonnage or more; It is a ship registered in India or having licence to operate in India; and A valid certificate in respect of such ship indicating its net tonnage is in force, But does not include A sea going ship or vessel if the main purpose for which it is used is the provisions of goods or services of a kind normally provided on land; Fishing vessels; Factory ship i.e. the ship providing processing services in respect of fishing produce; Pleasure crafts i.e. the ship whose primary use is for the purposes of sports or recreation; Harbor and river ferries; Offshore installations i.e. rigs oil; A qualifying ship which is used as a fishing vessel for a period of more than 30 days during a previous year.