What is Demerger? What is the Effect of temporarily
ceasing to operate qualifying ships? Section 115VZ and
Income Tax Act 1961
Demerger and Effect of temporarily ceasing to operate
qualifying ships are
defined under sections 115VZ and 115VZA of Income Tax Act 1961.
Provisions under these Sections are :
Section 115VZ of Income Tax Act "Demerger"
115VZ. Where in a scheme of demerger, the demerged
company transfers its business to the resulting company
before the expiry of the option for tonnage tax scheme,
then, subject to the other provisions of this Chapter, the
tonnage tax scheme shall, as far as may be, apply to the
resulting company for the unexpired period if it is a
Provided that the option for tonnage tax scheme in
respect of the demerged company shall remain in force for
the unexpired period of the tonnage tax scheme if it
continues to be a qualifying company.
Section 115VZA of Income Tax Act "Effect of
temporarily ceasing to operate qualifying ships"
Section 115VZA. (1) A temporary cessation (as
against permanent cessation) of operating any qualifying
ship by a company shall not be considered as a cessation of
operating of such qualifying ship and the company shall be
deemed to be operating such qualifying ship for the purposes
of this Chapter.
(2) Where a qualifying company continues to operate a
ship, which temporarily ceases to be a qualifying ship, such
ship shall not be considered as a qualifying ship for the
purposes of this Chapter.