Section 33AC of Income Tax Act "Reserves for shipping business"
33AC. (1) In the case of an assessee, being a Government
company or a public company formed and registered in India
with the main object of carrying on the business of
operation of ships, there shall, in accordance with and
subject to the provisions of this section, be allowed a
deduction of an amount not exceeding fifty per cent of
profits derived from the business of operation of ships
(computed under the head "Profits and gains of business or
profession" and before making any deduction under this
section), as is debited to the profit and loss account of
the previous year in respect of which the deduction is to be
allowed and credited to a reserve account, to be utilised in
the manner laid down in sub-section (2) :
Provided that where the aggregate of the amounts carried to
such reserve account from time to time exceeds twice the
aggregate of the amounts of the paid-up share capital, the
general reserves and amount credited to the share premium
account of the assessee, no allowance under this sub-section
shall be made in respect of such excess :
Provided further that for five assessment years commencing
on or after the 1st day of April, 2001 and ending before the
1st day of April, 2006, the provisions of this sub-section
shall have effect as if for the words "an amount not
exceeding fifty per cent of profits", the words "an amount
not exceeding the profits" had been substituted:
Provided also that no deduction shall be allowed under
this section for any assessment year commencing on or after
the 1st day of April, 2005.
(2) The amount credited to the reserve account under
sub-section (1) shall be utilised by the assessee before the
expiry of a period of eight years next following the
previous year in which the amount was credited-
(a) for acquiring a new ship for the purposes of the
business of the assessee ; and
(b) until the acquisition of a new ship, for the purposes of
the business of the assessee other than for distribution by
way of dividends or profits or for remittance outside India
as profits or for the creation of any asset outside India.
(3) Where any amount credited to the reserve account under
sub-section (1),-
(a) has been utilised for any purpose other than that
referred to in clause (a) or clause (b) of sub-section (2),
the amount so utilised ; or
(b) has not been utilised for the purpose specified in
clause (a) of sub-section (2), the amount not so utilised ;
or
(c) has been utilised for the purpose of acquiring a new
ship as specified in clause (a) of sub-section (2), but such
ship is sold or otherwise transferred, other than in any
scheme of demerger by the assessee to any person at any time
before the expiry of three years from the end of the
previous year in which it was acquired, the amount so
utilised in acquiring the ship, shall be deemed to be the
profits,-
(i) in a case referred to in clause (a), in the year in
which the amount was so utilised ; or
(ii) in a case referred to in clause (b), in the year
immediately following the period of eight years specified in
sub-section (2) ; or
(iii) in a case referred to in clause (c), in the year in
which the sale or transfer took place, and shall be charged
to tax accordingly.
(4) Where the ship is sold or otherwise transferred (other
than in any scheme of demerger) after the expiry of the
period specified in clause (c) of sub-section (3) and the
sale proceeds are not utilised for the purpose of acquiring
a new ship within a period of one year from the end of the
previous year in which such sale or transfer took place, so
much of such sale proceeds which represent the amount
credited to the reserve account and utilised for the
purposes mentioned in clause (c) of sub-section (3) shall be
deemed to be the profits of the assessment year immediately
following the previous year in which the ship is sold or
transferred.
Explanation.-For the purposes of this section,-
(a) "public company" shall have the meaning assigned to it
in section 3 of the Companies Act, 1956 (1 of 1956) ;
(aa) "Government company" shall have the meaning assigned to
it in section 617 of the Companies Act, 1956 (1 of 1956) ;
(b) "new ship" shall have the same meaning as in clause (ii)
of sub-section (2) of section 32AB.
What is Development rebate? Section 33 of Income Tax Act 1961
What is Development allowance? Section 33A of Income Tax Act 1961
What is Site Restoration Fund? Section 33ABA of Income Tax Act 1961
What is Reserves for shipping business? Section 33AC of Income Tax Act 1961
What is Rehabilitation allowance? Section 33B of Income Tax Act 1961
What is Expenditure on scientific research? Section 35 of Income Tax Act 1961
What is Expenditure on know-how? Section 35AB of Income Tax Act 1961
What is Expenditure on eligible projects or schemes? Section 35AC of Income Tax Act 1961
What is Amortisation of certain preliminary expenses? Section 35D of Income Tax Act 1961