India - Income Tax Act 2010 - Saarc

S. 115VT I.T. ACT, 1961 1.590D.—Conditions for applicability of tonnage tax schemeTransfer of profits to Tonnage Tax Reserve Account.115VT. (1) A tonnage tax company shall, subject to and in accordance with theprovisions of this section, be required to credit to a reserve account(hereafter in this section referred to as the Tonnage Tax Reserve Account) anamount not less than twenty per cent of the book profit derived from theactivities referred to in clauses (i) and (ii) of sub-section (1) of section 115V-I ineach previous year to be utilised in the manner laid down in sub-section (3):Provided that a tonnage tax company may transfer a sum in excess of twenty percent of the book profit and such excess sum transferred shall also be utilised inthe manner laid down in sub-section (3).Explanation.—For the purposes of this section, “book profit” shall have the samemeaning as in the Explanation to sub-section (2) of section 115JB so far as itrelates to the income derived from the activities referred to in clauses (i) and (ii)of sub-section (1) of section 115V-I.(2) Where the company has book profit from the business of operating qualifyingships and book loss from any other sources, and consequently, the company isnot in a position to create the full or any part of the reserves under sub-section(1), the company shall create the reserves to the extent possible in that previousyear and the shortfall, if any, shall be added to the amount of the reservesrequired to be created for the following previous year and such shortfall shall bedeemed to be part of the reserve requirement of that following previous year :Provided that to the extent the shortfall in creation of reserves during aparticular previous year is carried forward to the following previous year underthis sub-section, the company shall be considered as having created sufficientreserves for the first mentioned previous year:Provided further that nothing contained in the first proviso shall apply in respectof the second year in case the shortfall in creation of reserves continues for twoconsecutive previous years.(3) The amount credited to the Tonnage Tax Reserve Account under sub-section(1) shall be utilised by the company before the expiry of a period of eight yearsnext following the previous year in which the amount was credited—(a) for acquiring a new ship for the purposes of the business of thecompany; and(b) until the acquisition of a new ship, for the purposes of the business ofoperating qualifying ships other than for distribution by way ofdividends or profits or for remittance outside India as profits or forthe creation of any asset outside India.(4) Where any amount credited to the Tonnage Tax Reserve Account under subsection(1),—(a) has been utilised for any purpose other than that referred to in clause(a) or clause (b) of sub-section (3); or(b) has not been utilised for the purpose specified in clause (a) of subsection(3); or