Income Tax Act, 2025
Section 115VK: Depreciation.—(1) For the purposes of computing depreciation under clause (iv) of
115VK. Depreciation.—(1) For the purposes of computing depreciation under clause (iv) of
section 115VL, the depreciation for the first previous year of the tonnage tax scheme (hereafter in this
section referred to as the first previous year) shall be computed on the written down value of the
qualifying ships as specified under sub-section (2).
(2) The written down value of the block of assets, being ships, as on the first day of the first previous
year, shall be divided in the ratio of the book written down value of the qualifying ships (hereafter in this
section referred to as the qualifying assets) and the book written down value of the non-qualifying ships
(hereafter in this section referred to as the other assets).
(3) The block of qualifying assets as determined under sub-section (2) shall constitute a separate
block of assets for the purposes of this Chapter.
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(4) For the purposes of sub-section (2), the book written down value of the block of qualifying assets
and the block of other assets shall be computed in the following manner, namely:—
(a) the book written down value of each qualifying asset and each other asset as on the first day
of the previous year and which form part of the block of assets to be divided shall be determined by
taking the book written down value of each asset appearing in the books of account as on the last day
of the preceding previous year:
Provided that any change in the value of the assets consequent to their revaluation after the date
on which the Finance (No. 2) Act, 2004 receives the assent of the President shall be ignored;
(b) the book written down value of all the qualifying assets and other assets shall be aggregated;
and
(c) the ratio of the aggregate book written down value of the qualifying assets to the aggregate
book written down value of the other assets shall be determined.
(5) Where an asset forming part of a block of qualifying assets begins to be used for purposes other
than the tonnage tax business, an appropriate portion of the written down value allocable to such asset
shall be reduced from the written down value of that block and shall be added to the block of other assets.
Explanation.—For the purposes of this sub-section, appropriate portion of the written down value
allocable to the asset, which begins to be used for purposes other than the tonnage tax business, shall be
an amount which bears the same proportion to the written down value of the block of qualifying assets as
on the first day of the previous year as the book written down value of the asset beginning to be used for
purposes other than tonnage tax business bears to the book written down value of all the assets forming
the block of qualifying asset.
(6) Where an asset forming part of a block of other assets begins to be used for tonnage tax business,
an appropriate portion of the written down value allocable to such asset shall be reduced from the written
down value of the block of other assets and shall be added to the block of qualifying asset.
Explanation.—For the purposes of this sub-section, appropriate portion of written down value
allocable to the asset which begins to be used for the tonnage tax business shall be an amount which bears
the same proportion to the written down value of the block of other assets as on the first day of the
previous year as the book written down value of the asset beginning to be used for tonnage tax business
bears to the total book written down value of all the assets forming the block of other assets.
(7) For the purposes of computing depreciation under clause (iv) of section 115VL in respect of an
asset mentioned in sub-sections (5) and (6), depreciation computed for the previous year shall be
allocated in the ratio of the number of days for which the asset was used for the tonnage tax business and
for purposes other than tonnage tax business.
Explanation 1.—For the removal of doubts, it is hereby declared that for the purposes of this Act,
depreciation on the block of qualifying assets and block of other assets so created shall be allowed as if
such written down value referred to in sub-section (2) had been brought forward from the preceding
previous year.
Explanation 2.—For the purposes of this section, “book written down value” means the written down
value as appearing in the books of account.
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115VL. General exclusion of deduction and set off, etc.—Notwithstanding anything contained in
any other provision of this Act, in computing the tonnage income of a tonnage tax company for any
previous year (hereafter in this section referred to as the “relevant previous year”) in which it is
chargeable to tax in accordance with this Chapter—
(i) sections 30 to 43B shall apply as if every loss, allowance or deduction referred to therein and
relating to or allowable for any of the relevant previous years, had been given full effect to for that
previous year itself;
(ii) no loss referred to in sub-sections (1) and (3) of section 70 or sub-sections (1) and (2) of
section 71 or sub-section (1) of section 72 or sub-section (1) of section 72A, in so far as such loss
relates to the business of operating qualifying ships of the company, shall be carried forward or set off
where such loss relates to any of the previous years when the company is under the tonnage tax
scheme;
(iii) no deduction shall be allowed under Chapter VIA in relation to the profits and gains from the
business of operating qualifying ships; and
(iv) in computing the depreciation allowance under section 32, the written down value of any
asset used for the purposes of the tonnage tax business shall be computed as if the company has
claimed and has been actually allowed the deduction in respect of depreciation for the relevant
previous years.
115VM. Exclusion of loss.—(1) Section 72 shall apply in respect of any losses that have accrued to a
company before its option for tonnage tax scheme and which are attributable to its tonnage tax business,
as if such losses had been set off against the relevant shipping income in any of the previous years when
the company is under the tonnage tax scheme.
(2) The losses referred to in sub-section (1) shall not be available for set off against any income other
than relevant shipping income in any previous year beginning on or after the company exercises its option
under section 115VP.
(3) Any apportionment necessary to determine the losses referred to in sub-section (1) shall be made
on a reasonable basis.
115VN. Chargeable gains from transfer of tonnage tax assets.—Any profits or gains arising from
the transfer of a capital asset being an asset forming part of the block of qualifying assets shall be
chargeable to income-tax in accordance with the provisions of section 45, read with section 50, and the
capital gains so arising shall be computed in accordance with the provisions of sections 45 to 51:
Provided that for the purpose of computing such profits or gains, the provisions of
section 50 shall have effect as if for the words “written down value of the block of assets”, the words
“written down value of the block of qualifying assets” had been substituted.
Explanation.—For the purposes of this Chapter, “written down value of the block of qualifying
assets” means the written down value computed in accordance with the provisions of sub-section (2) of
section 115VK.
115V-O. Exclusion from provisions of section 115JB.—The book profit or loss derived from the
activities of a tonnage tax company, referred to in sub-section (1) of section 115V-I, shall be excluded
from the book profit of the company for the purposes of section 115JB.
C.—Procedure for option of tonnage tax scheme
115VP. Method and time of opting for tonnage tax scheme.—(1) A qualifying company may opt
for the tonnage tax scheme by making an application to the Joint Commissioner having jurisdiction over
the company in the form and manner as may be prescribed, for such scheme.
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(2) The application under sub-section (1) may be made by any existing qualifying company at any
time after the 30th day of September, 2004 but before the 1st day of January, 2005 (hereafter referred to
as the “initial period”):
Provided that—
(i) a company incorporated after the initial period; or
(ii) a qualifying company incorporated before the initial period but which becomes a qualifying
company for the first time after the initial period,
may make an application within three months of the date of its incorporation or the date on which it
became a qualifying company, as the case may be.
(3) On receipt of an application for option for tonnage tax scheme under sub-section (1), the Joint
Commissioner may call for such information or documents from the company as he thinks necessary in
order to satisfy himself about the eligibility of the company and after satisfying himself about such
eligibility of the company to make such option for tonnage tax scheme, he—
(i) shall pass an order in writing approving the option for tonnage tax scheme; or
(ii) shall, if he is not so satisfied, pass an order in writing refusing to approve the option for
tonnage tax scheme,
and a copy of such order shall be sent to the applicant:
Provided that no order under clause (ii) shall be passed unless the applicant has been given a
reasonable opportunity of being heard.
(4) Every order granting or refusing the approval of the option for tonnage tax scheme under
clause (i) or clause (ii), as the case may be, of sub-section (3) shall be passed before the expiry of one
month from the end of the month in which the application was received under sub-section (1).
(5) Where an order granting approval is passed under sub-section (3), the provisions of this Chapter
shall apply from the assessment year relevant to the previous year in which the option for tonnage tax
scheme is exercised.
115VQ. Period for which tonnage tax option to remain in force.—(1) An option for tonnage tax
scheme, after it has been approved under sub-section (3) of section 115VP, shall remain in force for a
period of ten years from the date on which such option has been exercised and shall be taken into account
from the assessment year relevant to the previous year in which such option is exercised.
(2) An option for tonnage tax scheme shall cease to have effect from the assessment year relevant to
the previous year in which—
(a) the qualifying company ceases to be a qualifying company;
(b) a default is made in complying with the provisions contained in section 115VT or
section 115VU or section 115VV;
(c) the tonnage tax company is excluded from the tonnage tax scheme under section 115VZC;
(d) the qualifying company furnishes to the Assessing Officer, a declaration in writing to the
effect that the provisions of this Chapter may not be made applicable to it,
and the profits and gains of the company from the business of operating qualifying ships shall be
computed in accordance with the other provisions of this Act.
115VR. Renewal of tonnage tax scheme.—(1) An option for tonnage tax scheme approved under
sub-section (3) of section 115VP may be renewed within one year from the end of the previous year in
which the option ceases to have effect.
(2) The provisions of sections 115VP and 115VQ shall apply in relation to a renewal of the option for
tonnage tax scheme in the same manner as they apply in relation to the approval of option for tonnage tax
scheme.
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For the purposes of computing depreciation under clause
of
section 115VL, the depreciation for the first previous year of the tonnage tax scheme (hereafter in this
section referred to as the first previous year) shall be computed on the written down value of the
qualifying ships as specified under sub-section
The written down value of the block of assets, being ships, as on the first day of the first previous
year, shall be divided in the ratio of the book written down value of the qualifying ships (hereafter in this
section referred to as the qualifying assets) and the book written down value of the non-qualifying ships
(hereafter in this section referred to as the other assets).
The block of qualifying assets as determined under sub-section
shall constitute a separate
block of assets for the purposes of this Chapter.
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For the purposes of sub-section
the book written down value of each qualifying asset and each other asset as on the first day
of the previous year and which form part of the block of assets to be divided shall be determined by
taking the book written down value of each asset appearing in the books of account as on the last day
of the preceding previous year:
Provided that any change in the value of the assets consequent to their revaluation after the date
on which the Finance (No. 2) Act, 2004 receives the assent of the President shall be ignored;
the book written down value of all the qualifying assets and other assets shall be aggregated;
and
the ratio of the aggregate book written down value of the qualifying assets to the aggregate
book written down value of the other assets shall be determined.
Where an asset forming part of a block of qualifying assets begins to be used for purposes other
than the tonnage tax business, an appropriate portion of the written down value allocable to such asset
shall be reduced from the written down value of that block and shall be added to the block of other assets.
Explanation.—For the purposes of this sub-section, appropriate portion of the written down value
allocable to the asset, which begins to be used for purposes other than the tonnage tax business, shall be
an amount which bears the same proportion to the written down value of the block of qualifying assets as
on the first day of the previous year as the book written down value of the asset beginning to be used for
purposes other than tonnage tax business bears to the book written down value of all the assets forming
the block of qualifying asset.
Where an asset forming part of a block of other assets begins to be used for tonnage tax business,
an appropriate portion of the written down value allocable to such asset shall be reduced from the written
down value of the block of other assets and shall be added to the block of qualifying asset.
Explanation.—For the purposes of this sub-section, appropriate portion of written down value
allocable to the asset which begins to be used for the tonnage tax business shall be an amount which bears
the same proportion to the written down value of the block of other assets as on the first day of the
previous year as the book written down value of the asset beginning to be used for tonnage tax business
bears to the total book written down value of all the assets forming the block of other assets.
For the purposes of computing depreciation under clause
of section 115VL in respect of an
asset mentioned in sub-sections
and
had been brought forward from the preceding
previous year.
Explanation 2.—For the purposes of this section, “book written down value” means the written down
value as appearing in the books of account.
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115VL. General exclusion of deduction and set off, etc.—Notwithstanding anything contained in
any other provision of this Act, in computing the tonnage income of a tonnage tax company for any
previous year (hereafter in this section referred to as the “relevant previous year”) in which it is
chargeable to tax in accordance with this Chapter—
sections 30 to 43B shall apply as if every loss, allowance or deduction referred to therein and
relating to or allowable for any of the relevant previous years, had been given full effect to for that
previous year itself;
no loss referred to in sub-sections
and
of section 70 or sub-sections
and
of
section 71 or sub-section
of section 72 or sub-section
of section 72A, in so far as such loss
relates to the business of operating qualifying ships of the company, shall be carried forward or set off
where such loss relates to any of the previous years when the company is under the tonnage tax
scheme;
no deduction shall be allowed under Chapter VIA in relation to the profits and gains from the
business of operating qualifying ships; and
in computing the depreciation allowance under section 32, the written down value of any
asset used for the purposes of the tonnage tax business shall be computed as if the company has
claimed and has been actually allowed the deduction in respect of depreciation for the relevant
previous years.
115VM. Exclusion of loss.—
Section 72 shall apply in respect of any losses that have accrued to a
company before its option for tonnage tax scheme and which are attributable to its tonnage tax business,
as if such losses had been set off against the relevant shipping income in any of the previous years when
the company is under the tonnage tax scheme.
The losses referred to in sub-section
shall not be available for set off against any income other
than relevant shipping income in any previous year beginning on or after the company exercises its option
under section 115VP.
Any apportionment necessary to determine the losses referred to in sub-section
shall be made
on a reasonable basis.
115VN. Chargeable gains from transfer of tonnage tax assets.—Any profits or gains arising from
the transfer of a capital asset being an asset forming part of the block of qualifying assets shall be
chargeable to income-tax in accordance with the provisions of section 45, read with section 50, and the
capital gains so arising shall be computed in accordance with the provisions of sections 45 to 51:
Provided that for the purpose of computing such profits or gains, the provisions of
section 50 shall have effect as if for the words “written down value of the block of assets”, the words
“written down value of the block of qualifying assets” had been substituted.
Explanation.—For the purposes of this Chapter, “written down value of the block of qualifying
assets” means the written down value computed in accordance with the provisions of sub-section
of
section 115VK.
115V-O. Exclusion from provisions of section 115JB.—The book profit or loss derived from the
activities of a tonnage tax company, referred to in sub-section
of section 115V-I, shall be excluded
from the book profit of the company for the purposes of section 115JB.
C.—Procedure for option of tonnage tax scheme
115VP. Method and time of opting for tonnage tax scheme.—
A qualifying company may opt
for the tonnage tax scheme by making an application to the Joint Commissioner having jurisdiction over
the company in the form and manner as may be prescribed, for such scheme.
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The application under sub-section
may be made by any existing qualifying company at any
time after the 30th day of September, 2004 but before the 1st day of January, 2005 (hereafter referred to
as the “initial period”):
Provided that—
a company incorporated after the initial period; or
a qualifying company incorporated before the initial period but which becomes a qualifying
company for the first time after the initial period,
may make an application within three months of the date of its incorporation or the date on which it
became a qualifying company, as the case may be.
On receipt of an application for option for tonnage tax scheme under sub-section
shall pass an order in writing approving the option for tonnage tax scheme; or
shall, if he is not so satisfied, pass an order in writing refusing to approve the option for
tonnage tax scheme,
and a copy of such order shall be sent to the applicant:
Provided that no order under clause
shall be passed unless the applicant has been given a
reasonable opportunity of being heard.
Every order granting or refusing the approval of the option for tonnage tax scheme under
clause
or clause
shall be passed before the expiry of one
month from the end of the month in which the application was received under sub-section
Where an order granting approval is passed under sub-section
An option for tonnage tax
scheme, after it has been approved under sub-section
of section 115VP, shall remain in force for a
period of ten years from the date on which such option has been exercised and shall be taken into account
from the assessment year relevant to the previous year in which such option is exercised.
An option for tonnage tax scheme shall cease to have effect from the assessment year relevant to
the previous year in which—
the qualifying company ceases to be a qualifying company;
a default is made in complying with the provisions contained in section 115VT or
section 115VU or section 115VV;
the tonnage tax company is excluded from the tonnage tax scheme under section 115VZC;
the qualifying company furnishes to the Assessing Officer, a declaration in writing to the
effect that the provisions of this Chapter may not be made applicable to it,
and the profits and gains of the company from the business of operating qualifying ships shall be
computed in accordance with the other provisions of this Act.
115VR. Renewal of tonnage tax scheme.—
An option for tonnage tax scheme approved under
sub-section
of section 115VP may be renewed within one year from the end of the previous year in
which the option ceases to have effect.
The provisions of sections 115VP and 115VQ shall apply in relation to a renewal of the option for
tonnage tax scheme in the same manner as they apply in relation to the approval of option for tonnage tax
scheme.
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