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TMI Blog2015 (2) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the income derived from slot charter operations of a tonnage tax company is not liable to be excluded while determining the tonnage income under the tonnage tax scheme on the ground that such operations are carried on in ships which are not qualifying ships in terms of the provisions of Chapter XII G of the Act. - I.T.A. Nos. 128 & 129 of 2012 - - - Dated:- 23-1-2015 - Thottathil B. Radhakrishnan And A. Muhamed Mustaque,JJ. For the Petitioner : Sri. Porus Kaka, Senior Advocate For the Respondent : Sri. P. K. R. Menon JUDGMENT Thottathil B.Radhakrishnan, J . 1. Should the `slot charter' operations of a `tonnage tax company' be carried on only in `qualifying ships' to include the income from such operations to determine the `tonnage income' under the `tonnage tax scheme' in terms of the provisions of Chapter XII G of the Income Tax Act, 1961; the Act , for short? In other words, is the income derived from `slot charter' operations of a `tonnage tax company' liable to be excluded while determining the `tonnage income' under the `tonnage tax scheme' if such operations are carried on in ships which are not `quali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to the different provisions contained in Chapter XII G of the Act and the relevant rules and forms in the Rules, the learned senior counsel appearing for the appellant argued that the provisions clearly show that the deemed tonnage computation for slot charters is to be separately computed, independent and in addition to computation for qualifying ships for which the net tonnage certificate is given for ships owned by the assessee. Specific reference was made to Sections 115VA, 115VB and 115VG(4) of the Act and Rule 11Q of the Rules and Form No.66 under the Rules. Explanatory Notes to the Finance Act, 2004 were also referred to. The statutory form of audit report which should be in Form 66 specifically says that there is no need to mention the name of the ship, income from which is computed on deemed tonnage basis, it is pointed out. The mode in which Rule 11Q and the forms are placed and Note 3 to Form 66 are also pointedly referred to, to argue that the scheme of the Act and Rules never permit an interpretation to hold that to include the income derived from slot charter arrangements, such operations ought to be carried on through qualifying ships. It is further argued that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 6 of Section 115VI to say that 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 the Act. The decision of the Tribunal does not warrant interference, it is argued. 7. Chapter XII G of the Act, consisting of Sections 115V to 115VZC, was inserted by Finance (No.2) Act, 2004 with effect from 1.4.2005. 'Tonnage tax scheme' is defined in clause (m) of Section 115V to mean a scheme for computation of profits and gains of business of operating qualifying ships under the provisions of Chapter XII G. Section 115V(j) defines 'tonnage income' to mean the income of the tonnage tax company computed in accordance with the provisions of that Chapter and 'tonnage tax company' is a qualifying company in relation to which tonnage tax option is in force - Section 115V(l). The appellant is a qualifying company and is a tonnage tax company. Section 115VE prescribes the manner of computation of income under tonnage tax scheme. Computation of tonnage income is governed by Section 115VG. Sub- section 4 of that Section says t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of a tonnage tax company even if such operations are carried on in ships which are not qualifying ships in terms of the provisions of Chapter XII G of the Act. 9. The provision in sub-section 4 of Section 115VG itself explicitly demonstrates that what is included as deemed tonnage computed in the manner prescribed under Rule 11Q is not necessarily referable to the tonnage of a ship. There is nothing in the Act or rules to even faintly indicate that the arrangements which fall within the basket of the provision 'deemed tonnage' incorporated through Explanation to sub-section 4 of Section 115VG would be operative only if such arrangements are carried out through qualifying ships. More importantly, when the Legislature has deemed a particular situation and has created a deeming provision, it is trite law that the said deeming provision should be permitted to permeate to the extent within which the deeming provision stands. S. Teja Singh (supra) and Collector of Customs, Cochin (supra) cited on behalf of the appellant apply on all fours in interpreting the provision in hand. 10. Form 66 under Rule 11T of the Rules is a statutory form. It prescribes a formula for conve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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