Section 115V of Income Tax Act "Definitions"
115V. In this Chapter, unless the context otherwise
requires,-
(a) "bareboat charter" means hiring of a ship for a
stipulated period on terms which give the charterer
possession and control of the ship, including the right to
appoint the master and crew;
(b) "bareboat charter-cum-demise" means a bareboat charter
where the ownership of the ship is intended to be
transferred after a specified period to the company to whom
it has been chartered;
(c) "Director-General of Shipping" means the
Director-General of Shipping appointed by the Central
Government under sub-section (1) of section 7 of the
Merchant Shipping Act, 1958 (44 of 1958);
(d) "factory ship" includes a vessel providing processing
services in respect of processing of the fishing produce;
(e) "fishing vessel" shall have the meaning
assigned to it in clause (12) of section 3 of the Merchant
Shipping Act, 1958 (44 of 1958);
(f) "pleasure craft" means a ship of a kind whose primary
use is for the purposes of sport or recreation;
(g) "qualifying company" means a company referred to in
section 115VC;
(h) "qualifying ship" means a ship referred to in section
115VD;
(i) "seagoing ship" means a ship if it is certified as such
by the competent authority of any country;
(j) "tonnage income" means the income of a tonnage tax
company computed in accordance with the provisions of this
Chapter;
(k) "tonnage tax activities" means the activities referred
to in sub-sections (2) and (5) of section 115V-I;
(l) "tonnage tax company" means a qualifying company in
relation to which tonnage tax option is in force;
(m) "tonnage tax scheme" means a scheme for computation of
profits and gains of business of operating qualifying ships
under the provisions of this Chapter.
115V-I. (1) For the purposes of this Chapter, the
relevant shipping income of a tonnage tax company means-
(i) its profits from core activities referred to in
sub-section (2);
(ii) its profits from incidental activities referred to in
sub-section (5):
Provided that where the aggregate of all such incomes
specified in clause (ii) exceeds one-fourth per cent 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.
(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-
(i) earning from pooling arrangements;
(ii) contracts of affreightment.
Explanation.-For the purposes of this sub-clause,-
(a) "pooling arrangement" means an agreement between two or
more persons for providing services through a pool or
operating one or more ships and sharing earnings or
operating profits on the basis of mutually agreed terms;
(b) "contract of affreightment" means a service contract
under which a tonnage tax company agrees to transport a
specified quantity of specified products at a specified
rate, between designated loading and discharging ports over
a specified period;
(B) specific shipping trades, being-
(i) on-board or on-shore activities of passenger ships
comprising of fares and food and beverages consumed on
board;
(ii) slot charters, space charters, joint charters, feeder
services, container box leasing of container shipping.
(3) The Central Government, if it considers necessary or
expedient so to do, may, by notification in the Official
Gazette, exclude any activity referred to in clause (ii) of
sub-section (2) or prescribe the limit up to which such
activities shall be included in the core activities for the
purposes of this section.
(4) Every notification issued under this Chapter shall be
laid, as soon as may be after it is issued, before each
House of Parliament, while it is in session for a total
period of thirty days which may be comprised in one session
or in two or more successive sessions, and if, before the
expiry of the session immediately following the session or
the successive sessions aforesaid, both Houses agree in
making any modification in the notification, or both Houses
agree that the notification should not be issued, the
notification shall thereafter have effect only in such
modified form or be of no effect, as the case may be; so,
however, that any such modification or annulment shall be
without prejudice to the validity of anything previously
done under that notification.
(5) The incidental activities shall be the activities which
are incidental to the core activities and which may be
prescribed for the purpose.
(6) 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.
(7) 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:
Provided that where, in the opinion of the Assessing
Officer, the computation of the relevant shipping income in
the manner hereinbefore specified presents exceptional
difficulties, the Assessing Officer may compute such income
on such reasonable basis as he may deem fit.
Explanation.-For the purposes of this sub-section, "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.
(8) 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.
Explanation.-For the purposes of this Chapter, 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.