Section 115VZC of Income Tax Act: Exclusion from tonnage tax scheme Income Tax


Amended and updated notes on section 115VZC of Income Tax Act 1961 as amended by the Finance Act 2020 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to exclusion from tonnage tax scheme.

Chapter XIIG (Sections 115V to 115VZC) of the Income Tax Act 1961 deals with the provisions related to special provisions relating to income of shipping companies. Section 115VZC of IT Act 1961-2020 provides for exclusion from tonnage tax scheme.

Recently, we have discussed in detail section 115VZB (Avoidance of tax) of IT Act 1961. Today, we learn the provisions of section 115VZC of Income-tax Act 1961. The amended provision of section 115VZC is effective for financial year 2020-21 relevant to the assessment year 2021-22.

In this article, you will learn detail of the provisions of section 115VZC of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Section-115VZC: Exclusion from tonnage tax scheme

Section 115VZC(1) of Income Tax Act

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 Principal Chief Commissioner or Chief Commissioner.

Section 115VZC(2) of Income Tax Act

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.

Section 115VZC(3) of Income Tax Act

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.



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