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What is Avoidance of tax? What is Exclusion from tonnage tax scheme? Section 115VZB and 115VZC of Income Tax Act 1961

Avoidance of tax and Exclusion from tonnage tax scheme are defined under sections 115VZB and 115VZC of Income Tax Act 1961. Provisions under these Sections are :

Section 115VZB of Income Tax Act "Avoidance of tax"

Section 115VZB. (1) Subject to the provisions of this Chapter, the tonnage tax scheme shall not apply where a tonnage tax company is a party to any transaction or arrangement which amounts to an abuse of the tonnage tax scheme.

(2) For the purposes of sub-section (1), a transaction or arrangement shall be considered an abuse if the entering into or the application of such transaction or arrangement results, or would but for this section have resulted, in a tax advantage being obtained for-

(i) a person other than a tonnage tax company; or
(ii) a tonnage tax company in respect of its non-tonnage tax activities.

Explanation.-For the purposes of this section, "tax advantage" include,-

(i) the determination of the allowance for any expense or interest, or the determination of any cost or expense allocated or apportioned, or, as the case may be, which has the effect of reducing the income or increasing the loss, as the case may be, from activities other than tonnage tax activities chargeable to tax, computed on the basis of entries made in the books of account in respect of the previous year in which the transaction was entered into; or

(ii) a transaction or arrangement which produces to the tonnage tax company more than ordinary profits which might be expected to arise from tonnage tax activities.

 

Section 115VZC of Income Tax Act "Exclusion from tonnage tax scheme"

Section 115VZC. (1) Where a tonnage tax company is a party to any transaction or arrangement referred to in sub-section (1) of section 115VZB, the Assessing Officer shall, by an order in writing, exclude such company from the tonnage tax scheme:

Provided that an opportunity shall be given by the Assessing Officer by serving a notice calling upon such company to show cause, on a date and time to be specified in the notice, why it should not be excluded from the tonnage tax scheme:

Provided further that no order under this sub-section shall be passed without the previous approval of the 5[Principal Chief Commissioner or] Chief Commissioner.

(2) The provisions of this section shall not apply where the company shows to the satisfaction of the Assessing Officer that the transaction or arrangement was a bona fide commercial transaction and had not been entered into for the purpose of obtaining tax advantage under this Chapter.

(3) Where an order has been passed under sub-section (1) by the Assessing Officer excluding the tonnage tax company from the tonnage tax scheme, the option for tonnage tax scheme shall cease to be in force from the first day of the previous year in which the transaction or arrangement was entered into.

   
 

Income Tax Act 1961

What is Depreciation? What is General exclusion of deduction and set off, etc? Section 115VK and 115VL of Income Tax Act 1961

What is Exclusion of loss? What is Chargeable gains from transfer of tonnage tax assets? Section 115VM and 115VN of Income Tax Act 1961

What is Method and time of opting for tonnage tax scheme? What is Period for which tonnage tax option to remain in force? Section 115VP and 115VQ of Income Tax Act 1961

What is Renewal of tonnage tax scheme? What is Prohibition to opt for tonnage tax scheme in certain cases? Section 115VR and 115VS of Income Tax Act 1961

What is Transfer of profits to Tonnage Tax Reserve Account? What is Minimum training requirement for tonnage tax company? Section 115VT and 115VU of Income Tax Act 1961

What is Limit for charter in of tonnage? What is Maintenance and audit of accounts? Section 115VV and 115VW of Income Tax Act 1961

What is Determination of tonnage Amalgamation? Section 115VX and 115VY of Income Tax Act 1961

What is Demerger? What is the Effect of temporarily ceasing to operate qualifying ships? Section 115VZ and 115VZA of Income Tax Act 1961

What is Avoidance of tax? What is Exclusion from tonnage tax scheme? Section 115VZB and 115VZC of Income Tax Act 1961

What are the Definitions of Fringe Benefit? What is Charge of fringe benefit tax? Section 115W and 115WA of Income Tax Act 1961

What are Fringe benefits? What is Value of fringe benefits? Section 115WB and 115WC of Income Tax Act 1961

What is Return of fringe benefits? What is fringe benefits Assessment? Section 115WD and 115WE of Income Tax Act 1961

What is Best judgment assessment? What is Fringe benefits escaping assessment? Section 115WF and 115WG of Income Tax Act 1961

What is Issue of notice where fringe benefits have escaped assessment? What is the method of Payment of fringe benefit tax? Section 115WH and 115WI of Income Tax Act 1961

 

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