Income Tax Act, 2025
Section 115VY: Amalgamation.—Where there has been an amalgamation of a company with another
115VY. Amalgamation.—Where there has been an amalgamation of a company with another
company or companies, then, subject to the other provisions of this section, the provisions relating to the
tonnage tax scheme shall, as far as may be, apply to the amalgamated company if it is a qualifying
company:
Provided that where the amalgamated company is not a tonnage tax company, it shall exercise an
option for tonnage tax scheme under sub-section (1) of section 115VP within three months from the date
of the approval of the scheme of amalgamation:
Provided further that where the amalgamating companies are tonnage tax companies, the provisions
of this Chapter shall, as far as may be, apply to the amalgamated company for such period as the option
for tonnage tax scheme which has the longest unexpired period continues to be in force:
Provided also that where one of the amalgamating companies is a qualifying company as on the 1st
day of October, 2004 and which has not exercised the option for tonnage tax scheme within the initial
period, the provisions of this Chapter shall not apply to the amalgamated company and the income of the
amalgamated company from the business of operating qualifying ships shall be computed in accordance
with the other provisions of this Act.
115VZ. Demerger.—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 qualifying company:
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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.
F.—Miscellaneous
115VZA.Effect of temporarily ceasing to operate qualifying ships.—(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.
G.—Provisions of this Chapter not to apply in certain cases
115VZB. Avoidance of tax.—(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.
115VZC. Exclusion from tonnage tax scheme.—(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 1[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.]
of section 115VP within three months from the date
of the approval of the scheme of amalgamation:
Provided further that where the amalgamating companies are tonnage tax companies, the provisions
of this Chapter shall, as far as may be, apply to the amalgamated company for such period as the option
for tonnage tax scheme which has the longest unexpired period continues to be in force:
Provided also that where one of the amalgamating companies is a qualifying company as on the 1st
day of October, 2004 and which has not exercised the option for tonnage tax scheme within the initial
period, the provisions of this Chapter shall not apply to the amalgamated company and the income of the
amalgamated company from the business of operating qualifying ships shall be computed in accordance
with the other provisions of this Act.
115VZ. Demerger.—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 qualifying company:
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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.
F.—Miscellaneous
115VZA.Effect of temporarily ceasing to operate qualifying ships.—
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.
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.
G.—Provisions of this Chapter not to apply in certain cases
115VZB. Avoidance of tax.—
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.
For the purposes of sub-section
a person other than a tonnage tax company; or
a tonnage tax company in respect of its non-tonnage tax activities.
Explanation.—For the purposes of this section, “tax advantage” include,—
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
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.
115VZC. Exclusion from tonnage tax scheme.—
Where a tonnage tax company is a party to any
transaction or arrangement referred to in sub-section
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 1[Principal Chief Commissioner or Chief Commissioner].
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.
Where an order has been passed under sub-section
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.]