Income Tax Act, 2025
Section 4: Ins. by Act 10 of 2000, s. 15 (w.e.f. 12001).
4. Ins. by Act 10 of 2000, s. 15 (w.e.f. 12001).
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1[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 2[sold or otherwise transferred, other than in any scheme of
demerger] by the assessee to any person at any time before the expiry of 3[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[(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, 5[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);
The amount credited to the reserve account under sub-section
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—
for acquiring a new ship for the purposes of the business of the assessee; and
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.
Where any amount credited to the reserve account under sub-section
has been utilised for any purpose other than that referred to in clause
or clause
of
sub-section
has not been utilised for the purpose specified in clause
of sub-section
has been utilised for the purpose of acquiring a new ship as specified in clause
of
sub-section
in a case referred to in clause
in a case referred to in clause
in a case referred to in clause
Where the ship is sold or otherwise transferred (other than in any scheme of demerger) after the
expiry of the period specified in clause
of sub-section
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, 5[so much of such sale proceeds which represent the amount credited to
the reserve account and utilised for the purposes mentioned in clause
of sub-section
“public company” shall have the meaning assigned to it in section 3 of the Companies
Act, 1956 (1 of 1956);