Section 115VL of The Income Tax Act 1961
Notwithstanding anything contained in any other provision of this Act, in computing the tonnage income of a tonnage tax company for any previous year (hereafter in this section referred to as the “relevant previous year”) in which it is chargeable to tax in accordance with this Chapter—
- (i)sections 30 to 43B shall apply as if every loss, allowance or deduction referred to therein and relating to or allowable for any of the relevant previous years, had been given full effect to for that previous year itself;
- (ii)no loss referred to in sub-sections (1) and (3) of section 70 or sub-sections (1) and (2) of section 71 or sub-section (1) of section 72 or sub-section (1) of section 72A, in so far as such loss relates to the business of operating qualifying ships of the company, shall be carried forward or set off where such loss relates to any of the previous years when the company is under the tonnage tax scheme;
- (iii)no deduction shall be allowed under Chapter VIA in relation to the profits and gains from the business of operating qualifying ships; and
- (iv)in computing the depreciation allowance under section 32, the written down value of any asset used for the purposes of the tonnage tax business shall be computed as if the company has claimed and has been actually allowed the deduction in respect of depreciation for the relevant previous years.
Summary
Notwithstanding anything contained in any other provision of this Act, in computing the tonnage income of a tonnage tax company for any previous year (hereafter in this section referred to as the “relevant previous year”) in which it is chargeable to tax in accordance with this Chapter, (i).
Practical examples
FAQ
1. can i claim business deductions under Section 115VL of the Income Tax Act 1961
No. Under Section 115VL of the Income Tax Act 1961, you cannot use any other deductions or use losses to lower the income calculated under the tonnage tax system.
2. does depreciation apply to tonnage income in the Income Tax Act Section 115VL
While regular depreciation is generally excluded from the final calculation, Section 115VL of the Income Tax Act 1961 ensures that no separate deduction for it is allowed when figuring out the tonnage income itself.
3. can past business losses be used against tonnage profits in Section 115VL
No. Section 115VL of the Income Tax Act 1961 prohibits setting off any losses from other parts of the law against the tonnage income.
Test yourself
Q1.Under Section 115VL of The Income Tax Act 1961, what is the rule regarding deductions while calculating tonnage income?
Q2.How does Section 115VL of The Income Tax Act 1961 affect the use of losses from other sources?
Q3.When computing income for a tonnage tax company, does Section 115VL of the Income Tax Act 1961 allow for Chapter VIA deductions?
Q4.Does Section 115VL of the Income Tax Act 1961 override other provisions regarding income computation?