Section 234 — Avoidance of tax and exclusion from tonnage tax scheme
(1) Subject to the provisions of this Part, the tonnage tax scheme shall not
apply where a tonnage tax company is a party to any transaction or arrange-
ment which amounts to an abuse of the tonnage tax scheme.
(2) For the purposes of sub-section (1), a transaction or arrangement shall be
considered an abuse, if the entering into or the application of such transaction or
arrangement results, or would but for this section have resulted, in a tax advantage
being obtained for—
( a) a person other than a tonnage tax company; or
( b) a tonnage tax company in respect of its non-tonnage tax activities.
(3) For the purposes of this section, “tax advantage” includes—
(a) the determination of—
( i) the allowance for any expense or interest; or
( ii) any cost or expense allocated or apportioned,
which has the effect of reducing the income or increasing the loss, from
activities other than tonnage tax activities chargeable to tax, computed
on the basis of entries made in the books of account in respect of the tax
year in which the transaction was entered into; or
( b) a transaction or arrangement which produces to the tonnage tax com -
pany more than ordinary profits which might be expected to arise from
tonnage tax activities.
(4) Where a tonnage tax company is a party to any transaction or arrangement
referred to in sub-section (1), the Assessing Officer shall, by an order in writing,
exclude such company from the tonnage tax scheme.
(5) The Assessing Officer shall pass an order under sub-section (4), after––
( a) giving an opportunity to the company 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; and
( b) obtaining prior approval of the Principal Chief Commissioner or Chief
Commissioner.
(6) The provisions of this section shall not apply where the company satisfies 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 advan-
tage under this Part.
(7) Where an order has been passed under sub-section (4) 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 tax year in
which the transaction or arrangement was entered into.
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 229 — Depreciation and gains relating to tonnage tax assets
- 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 235 — Interpretation