TaxTMI 
TaxTMI 
2008 (2) TMI 388
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....Commissioner, issued exhibit P5 decision rejecting that application. This is under challenge. 4. The petitioner-company alleges that it acquired four ships between 1995 and 2001 and that it has been regularly assessed to income-tax in respect of income earned by it, including the income from the business of operating ships. It has also pleaded the particulars of income earned by it in respect of the business relating to the operation of ships between 1995-96 and 2003-04. On the basis of such pleadings, it is asserted that the view taken in the impugned exhibit P5 refusing to accept the option of the petitioner for the tonnage tax scheme is without jurisdiction and that the Joint Commissioner ought to have acted on the option of the petitioner which, it is asserted, is a qualifying company in terms of section 115VC of the Act. 5. Learned senior advocate Sri V. Ramachandran argued on behalf of the petitioner that the effect of the provisions contained in section 115VA of the Act, whereby the income from the business of operating qualifying ships is available for computation on the basis of option in terms of the provisions of Chapter XII-G, as available to a company, cannot be ....
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....the concept of its memorandum and articles, all business activities as could be conceived from the point of view of a company, then established in Madras, during the British regime and that for determining the "main object of the company", at this distant point of time, mere reference to its memorandum and articles is insufficient, it is argued that the real thrust of the business activities that the company carries on at the relevant time, that is, while it seeks option under Chapter XII-G of the Act, has to be reckoned. On the basis of such contention, it is argued that the provisions of Chapter XII-G, having been introduced with effect from April 1, 2005, it ought to have been considered that the petitioner had established that the operating ships as contemplated in that Chapter is one of the main objects of the petitioner for the purpose of the said Chapter. 8. On behalf of the Department, learned senior advocate Sri P. K. R. Menon, argued that though the issue in hand involves the interpretation of two statutory provisions, including the question as to the scope and content of the term "main object" in section 115VC(d) of the Act, the petitioner has an alternative statutory....
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....at the assessee is engaged in operation of different divisions, namely, civil engineering division, clearing and forwarding division, inland water transport, granite division, windmill division, shipping division and textile division and that the profit and loss account for the year ended March 31, 2003, and March 31, 2004, would show that out of the gross income of Rs. 3,30,39,61,852 for the year ended March 31, 2004, the ship charter income is Rs. 49,57,91,037 and out of Rs. 3,26,32,12,101 for the year ended March 31, 2003, the ship charter income is Rs. 30,84,67,989. The first respondent accordingly concluded that as per the details available, it is seen that the income from shipping business and income from the qualifying ship forms only small portion out of the gross income of the company. Adverting to the memorandum and articles of association of the petitioner company, the first respondent has taken it that the business of the petitioner, as shippers, shipping agents, etc., is only one of the several objectives and is not the main objective. It is also noticed that though the company was established in 1935, it had not entered into the shipping business until 1995 when it pu....
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....referable to section 115VA. The overwhelming thrust of section 115VA is the derivation of income from the business of operating qualifying ships. The concept of "the main object of the company" in section 115VC(d), in the absence of any provision to the contrary in Chapter XII-G, has necessarily to be understood in the manner in which that term is understood in common parlance, without being tied down to any requirement of the Companies Act to classify the objects of a company into principal and ancillary and show them distinctly in the object clauses in the memorandum of association of the company. In the context of business operations by companies having different business activities, the purpose of providing a provision like section 115VA has to be understood to be one intended to provide a method of computation on tonnage basis, at the option of the assessee. In that view of the matter, the plain meaning of the term "the main object of the company" in section 115VC(d), does not call for any restriction that the said provision would apply only in cases where the company applying for the approval of its option, has to be one which has the business of operating ships enumerated as....