Section 115VV of Income Tax Act "Limit for charter in of tonnage"
Section 115VV. (1) In the case of every company which has opted for tonnage tax scheme, not more than forty-nine per cent of the net tonnage of the qualifying ships operated by it during any previous year shall be chartered in.
(2) The proportion of net tonnage referred to in sub-section (1) in respect of a previous year shall be calculated based on the average of net tonnage during that previous year.
(3) For the purposes of sub-section (2), the average of net tonnage shall be computed in such manner as may be prescribed in consultation with the Director-General of Shipping.
(4) Where the net tonnage of ships chartered in exceeds the limit under sub-section (1) during any previous year, the total income of such company in relation to that previous year shall be computed as if the option for tonnage tax scheme does not have effect for that previous year.
(5) Where the limit under sub-section (1) had exceeded in any two consecutive previous years, the option for tonnage tax scheme shall cease to have effect from the beginning of the previous year following the second consecutive previous year in which the limit had exceeded.
Explanation.-For the purposes of this section, the term "chartered in" shall exclude a ship chartered in by the company on bareboat charter-cum-demise terms.
Section 115VW of Income Tax Act "Maintenance and audit of accounts"
Section 115VW. An option for tonnage tax scheme by a tonnage tax company shall not have effect in relation to a previous year unless such company-
(i) maintains separate books of account in respect of the business of operating qualifying ships; and
(ii) furnishes, along with the return of income for that previous year, the report of an accountant, in the prescribed form4 duly signed and verified by such accountant.
Explanation.-For the purposes of this section, "accountant" shall have the same meaning as in the Explanation below sub-section (2) of section 288.