Relevant shipping income & core activities of a tonnage tax company - Section 115VI - Income Tax - Ready Reckoner - Income Tax

Relevant shipping income core activities of a tonnage tax company - Section 115VI (1) The relevant shipping income of a tonnage tax company which is not chargeable to tax as per normal provisions means - ( i ) its profits from core activities referred u/s 115VI(2) ( ii ) its profits from incidental activities referred u/s 115VI(3) However, where the aggregate of all such incomes specified in clause ( ii ) exceeds 0.25% of the turnover from core activities referred to in sub-section (2), such excess shall not form part of the relevant shipping income for the purposes of this Chapter and shall be taxable under the other provisions of this Act. Core activities of a tonnage tax company [ Section 115VI(2) ] (2) The core activities of a tonnage tax company shall be ( i ) its activities from operating qualifying ships; and ( ii ) other ship-related activities mentioned as under- ( A ) shipping contracts in respect of earning from pooling arrangements contracts of affreightment. ( B ) specific shipping trades, being on-board or on-shore activities of passenger ships comprising of fares and food and beverages consumed on board slot charters, space charters, joint charters, feeder services, container box leasing of container shipping. Incidental Activities [Section 115VI(5)] (3) The incidental activities shall be the activities which are incidental to the core activities and which may be prescribed for the purpose. As per the Rule 11R , incidental activities shall be the following: - maritime consultancy charges income from loading or unloading cargo ship management fee or remuneration received for managed vessels and maritime education or recruitment fees. Income of non-qualifying ship to be computed as per normal provisions [Section 115VI(6)] (4) Where a tonnage tax company operates any ship, which is not a qualifying ship, the income attributable to operating such non-qualifying ship shall be computed in accordance with the other provisions of this Act. Infra business transfers [Section 115VI(7)] (5) Where any goods or services held for the purposes of tonnage tax business are transferred to any other business carried on by a tonnage tax company, or where any goods or services held for the purposes of any other business carried on by such tonnage tax company are transferred to the tonnage tax business and, in either case, the consideration, if any, for such transfer as recorded in the accounts of the tonnage tax business does not correspond to the market value of such goods or services as on the date of the transfer, then, the relevant shipping income under this section shall be computed as if the transfer, in either case, had been made at the market value of such goods or services as on that date. However where, in the opinion of the Assessing Officer, the computation of the relevant shipping income in the manner herein before specified presents exceptional difficulties, the Assessing Officer may compute such income on such reasonable basis as he may deem fit. Note:- market value , in relation to any goods or services, means the price that such goods or services would ordinarily fetch on sale in the open market. Computation of income in case there is close connection with any other person [Section 115VI(8)] (6) Where it appears to the Assessing Officer that, owing to the close connection between the tonnage tax company and any other person, or for any other reason, the course of business between them is so arranged that the business transacted between them produces to the tonnage tax company more than the ordinary profits which might be expected to arise in the tonnage tax business, the Assessing Officer shall, in computing the relevant shipping income of the tonnage tax company for the purposes of this Chapter, take the amount of income as may reasonably be deemed to have been derived therefrom. Note:- In case the relevant shipping income of a tonnage tax company is a loss, then, such loss shall be ignored for the purposes of computing tonnage income.