Section 229 — Depreciation and gains relating to tonnage tax assets
(1) For the purposes of computing depreciation under section 230(1)( d), the
depreciation for the first tax year of the tonnage tax scheme (herein referred to
as the first tax year) shall be computed on the written down value of the qualifying
ships as specified under sub-section (2).
(2) The written down value of the block of assets, being ships or inland vessels,
as the case may be, as on the first day of the first tax year, shall be divided in the
ratio of the book written down value of the qualifying ships (herein referred to as
the qualifying assets) and the book written down value of the non-qualifying ships
(herein referred to as the other assets), as per the following formula:—
D = A × B
B + C
E = A × C
B + C
where,—
D = the written down value of the block of qualifying assets as on the first
day of the tax year;
E = the written down value of the block of other assets as on the first day of
the tax year;
A = the written down value of the existing block of assets, being ships or
inland vessel, as the case may be, as on the first day of the tax year;
B = the aggregate of book written down value of qualifying assets as on the
last day of the preceding tax year; and
C = the aggregate of the book written down value of other assets as on the
last day of the preceding tax year.
(3) The block of qualifying assets as determined under sub-section (2) shall consti-
tute a separate block of assets for the purposes of this Part.
(4) Where an asset forming part of a block of,—
( a) qualifying assets begins to be used for purposes other than the tonnage
tax business, an appropriate portion of the written down value alloca -
ble to such asset shall be reduced from the written down value of that
block and shall be added to the block of other assets as per the following
formula:—
A = B × C
D
where,—
A = the appropriate portion of the written down value allo-
cable to the asset which begins to be used for purposes
other than the tonnage tax business;
B = the written down value of block of qualifying assets as
on the first day of the tax year;
C = the book written down value of qualifying asset which
begins to be used for purpose other than the tonnage
tax business; and
D = the aggregate of book written down value of all the assets
forming the block of qualifying assets;
( b) other assets, begins to be used for tonnage tax business, an appropriate
portion of the written down value allocable to such asset shall be reduced
from the written down value of the block of other assets and shall be
added to the block of qualifying asset as per the following formula:—
E = F × G
I
where,—
E = the appropriate proportion of the written down value allocable
to the asset which begins to be used for purposes of tonnage
tax business;
F = the written down value of block of other assets as on the first
day of the tax year;
G = book written down value of the other asset which begins to
be used for tonnage tax business; and
I = the aggregate of book written down value of all the assets
forming the block of other assets.
(5) For the purposes of computing depreciation under section 230(1)(d) in respect of
an asset mentioned in sub-sections (4)(a) and (b), the depreciation computed for the
tax year shall be allocated in the ratio of the number of days for which the asset was
used for the tonnage tax business and for purposes other than tonnage tax business.
(6) For the purposes of this Act, the depreciation on the block of qualifying assets
and block of other assets so created shall be allowed as if such written down value
referred to in sub-section (2) had been brought forward from the preceding tax year.
(7) For the purposes of this section, the expression “book written down value” means
the written down value as per books of account.
(8) Any profits or gains arising from the transfer of a capital asset being an asset
forming part of the block of qualifying assets shall be chargeable to income-tax as
per sections 67 and 74, and the capital gains so arising shall be computed as per
sections 67 to 81.
(9) For the purposes of computing such profits or gains, as referred to in sub-sec -
tion (8), the provisions of section 74 shall have effect as if for the words “written
down value of the block of assets”, the words “written down value of the block of
qualifying assets” had been substituted.
(10) For the purposes of this Chapter, the expression “written down value of the block
of qualifying assets” means the written down value computed as per sub-section (2).
Related sections
- Section 190 — Determination of tax where total income includes income on which no tax is payable
- Section 191 — Tax on accumulated balance of recognised provident fund
- Section 192 — Tax in case of block assessment of search cases
- Section 193 — Tax on income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer
- Section 194 — [Ss. 115B, 115BB, 115BBF, 115BBG, 115BBH and 115BBJ of the 1961 Act]
- Section 195 — Tax on income referred to in sections 102 to 106
- Section 196 — Tax on short-term capital gains in certain cases
- Section 197 — Tax on long-term capital gains
- Section 198 — Tax on long-term capital gains in certain cases
- Section 199 — Tax on income of certain manufacturing domestic companies
- Section 200 — Tax on income of certain domestic companies
- Section 201 — Tax on income of new manufacturing domestic companies
- Section 202 — New tax regime for individuals, Hindu undivided family and others
- Section 203 — Tax on income of certain resident co-operative societies
- Section 204 — Tax on income of certain new manufacturing co-operative societies
- Section 205 — Conditions for tax on income of certain companies and co-operative societies
- Section 206 — Special provision for minimum alternate tax and alternate minimum tax
- Section 207 — Tax on dividends, royalty and fees for technical service in case of foreign companies
- Section 208 — Tax on income from units purchased in foreign currency or capital gains arising from their transfer
- Section 209 — Tax on income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer
- Section 210 — Tax on income of Foreign Institutional Investors from securities or capital gains arising from their transfer
- Section 211 — Tax on non-resident sportsmen or sports associations
- Section 212 — Interpretation
- Section 213 — Special provision for computation of total income of non-residents
- Section 214 — Tax on investment income and long-term capital gains
- Section 215 — Capital gains on transfer of foreign exchange assets not to be charged in certain cases
- Section 216 — Return of income not to be furnished in certain cases
- Section 217 — Application of benefits under sections 212 to 216
- Section 218 — Tax on business income of Offshore Banking Units or International Financial Services Centre unit
- Section 219 — Conversion of an Indian branch of foreign company into subsidiary Indian company
- Section 220 — Foreign company said to be resident in India
- Section 221 — Tax on income from securitisation trusts
- Section 222 — Tax on income in case of venture capital undertakings
- Section 223 — Tax on income of unit holder and business trust
- Section 224 — Tax on income of investment fund and its unit holders
- Section 225 — Income from business of operating qualifying ships
- Section 226 — Tonnage tax scheme
- Section 227 — Computation of tonnage income
- Section 228 — Relevant shipping income and exclusion from book profit
- Section 230 — Exclusion of deduction, loss, set off, etc
- Section 231 — Method of opting of tonnage tax scheme and validity
- Section 232 — Certain conditions for applicability of tonnage tax scheme
- Section 233 — Amalgamation and demerger
- Section 234 — Avoidance of tax and exclusion from tonnage tax scheme
- Section 235 — Interpretation