What is Exclusion of loss? What is Chargeable gains from
transfer of tonnage tax assets? Section 115VM and
Income Tax Act 1961
Exclusion of loss and Chargeable gains from transfer of
tonnage tax assets are
defined under sections 115VM and 115VN of Income Tax Act 1961.
Provisions under these Sections are :
Section 115VM of Income Tax Act "Exclusion of
Section 115VM. (1) Section 72 shall apply in respect of
any losses that have accrued to a company before its option
for tonnage tax scheme and which are attributable to its
tonnage tax business, as if such losses had been set off
against the relevant shipping income in any of the previous
years when the company is under the tonnage tax scheme.
(2) The losses referred to in sub-section (1) shall not
be available for set off against any income other than
relevant shipping income in any previous year beginning on
or after the company exercises its option under section
(3) Any apportionment necessary to determine the losses
referred to in sub-section (1) shall be made on a reasonable
Section 115VN of Income Tax Act "Chargeable gains
from transfer of tonnage tax assets"
Section 115VN. Any profits or gains arising from
the transfer of a capital asset being an asset forming part
of the block of qualifying assets shall be chargeable to
income-tax in accordance with the provisions of section 45,
read with section 50, and the capital gains so arising shall
be computed in accordance with the provisions of sections 45
Provided that for the purpose of computing such profits
or gains, the provisions of section 50 shall have effect as
if for the words "written down value of the block of
assets", the words "written down value of the block of
qualifying assets" had been substituted.
Explanation.-For the purposes of this Chapter, "written
down value of the block of qualifying assets" means the
written down value computed in accordance with the
provisions of sub-section (2) of section 115VK.