Ship operators' reserve deductions impact tax breaks - profits from qualifying ships only eligible for shipping income deduction.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The High Court held that the deduction u/s 33AC for creating a reserve to acquire new ships must be factored in while computing the deduction u/s 80-I, which is based on profits from operating ships. The amendment in 1996 capping the Section 33AC deduction at 50% of profits did not change the core character of the allowance. If the Section 33AC deduction results in no profits from ships, the Section 80-I deduction cannot be claimed. Regarding proportionate allocation of the Section 33AC deduction between qualifying and non-qualifying ships for Section 80-I purposes, the High Court stated that it cannot provide its own basis for apportionment as an appellate forum.....