Law:

Section:

JUDGMENT Thottathil B. Radhakrishnan, J. - Should the 'slot charter' operations of a 'tonnage tax company' be carried on only in 'qualifying ships' to include the income from such operations to determine the 'tonnage income' under the 'tonnage tax scheme' in terms of the provisions of Chapter XII G of the Income Tax Act, 1961; the "Act", for short? In other words, is the income derived from 'slot charter' operations of a 'tonnage tax company' liable to be excluded while determining the 'tonnage income' under the 'tonnage tax scheme' if such operations are carried on in ships which are not 'qualifying ships' in terms of the provisions of that Chapter of the Act and the relevant provisions of the Income Tax Rules, 1962; for short, the "Rules"? 2. Afore-noted is the substantial question of law arising for decision in these appeals. It is formulated on the basis of the submissions of the learned Senior Advocates for the assessee and the revenue whom we have heard focusing on that question of law. 3. The fact that the appellant, whom we hereinafter refer to as the 'assessee', is a 'qualifying company' in terms of Section 115VC and that it owns at least one 'qualifying ship' as defined in Section 115VD is not in dispute. 4. The appeals relate to two assessment years. Appellant operated its 'qualifying ship' and had also 'slot charter' arrangements in other ships during those years. For both those years, the appellant filed returns computing its shipping income, under Chapter XII G of the Act which contains special provisions relating to income of shipping companies in Sections 115V to 115VZC, also reckoning the deemed tonnage in relation to its activities through slot charter arrangements. That did not find favour with the departmental hierarchy. The Income Tax Appellate Tribunal dismissed the appellant's appeals against the orders of the Commissioner of Income Tax (Appeals) holding that in order to avail the benefit of the provisions of Chapter XII G in relation to 'slot charter' arrangements, it is necessary to show that the ships in which the appellant had operations under 'slot charter' arrangements are also 'qualifying ships' and that such operation has to be…

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