Law:

Section:

Section 115VC, read with section 115VA, of the Income-tax Act, 1961 - Shipping companies - Qualifying company - Whether concept of 'the main object of company' in section 115VC(d), in absence of any provision to contrary in Chapter XII-G, has necessarily to be understood in manner in which that term is understood in common parlance without being tied down to any requirement of Companies Act to classify objects of a company into principal and ancillary and show them distinctly in object clauses in memorandum of association of company - Held, yes - Whether plain meaning of term 'the main object of company' in section 115VC(d) does not call for any restriction that said provision would apply only in cases where company applying for approval of its option, is one which has business of operating ships enumerated as its main object going by its memorandum of association - Held, yes Words and phrases : 'The main object of company' as occurring in section 15VC(d) of the Income-tax Act, 1961 FACTS The assessee opted for the tonnage tax scheme by making an application under section 115VP. The said application was rejected by the Additional Commissioner on the ground that carrying on of the business of operating ships was not the main object of the assessee-company going by its memorandum of association. The assessee filed petition challenging the impugned order. It contended that it had acquired four ships and had been regularly assessed in respect of income earned by it from multi-dimensional business activities which included income from business of operating ships and, as such, view taken in the impugned order refusing to accept its option for the tonnage tax scheme was without jurisdiction, inasmuch as it was a 'qualifying company' in terms of section 115VC. HELD For the purpose of Chapter XII-G, a qualifying ship, in terms of section 115VD, is one which satisfies the three conditions (a), (b) and (c ) thereof, but does not include the different categories enumerated thereunder as exclusions. The question as to whether a company is operating a ship, has to be decided with reference to section 115VB. These provisions will show that while the net effect of section…

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