Reserves for shipping business

A company formed and registered in India with the main object of carrying on the business of operation of ships. The provision of this section should be allowed to deduct an amount debited to the profit and loss account of the previous year. That amount does not exceed fifty percent of profits derived from the business of operation of ships (computed under the head "Profits of business or profession" and before making any deduction under this section). In respect of this, the deduction is allowed, credited to a reserve account and utilised in the "manner" laid down in a sub-section. There are occasionally more funds in this reserve account than there are in the total of the monies paid up.

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The provisions of this subsection shall have affected "an amount not exceeding fifty percent of the profit" and the word "an amount not exceeding the profits" sub-situated. The acquisition of a new ship is ensured for the business of the assessee other distribution by way of dividends or profits for remittance outside India. The reserved amount under the account has been utilised for any purpose. The amount has not been utilised for the purpose specified in the account. It has been utilised for acquiring a new ship as specified earlier, but the ship get sold out otherwise transferred the expiry of [three] years from the end of the previous year.

Subject to the other requirements in this section, if an assessee's total income includes income subject to tax under the head "Profits and gains of business or profession," and if any portion of that income was deposited in a Development Bank account before the end of the six-month period following the end of the prior year or before filing an income tax return, or without making a deposit into the bank account, he used any money over the previous year to buy a new ship, an aircraft, new machinery, or a plant, then a deduction will be granted to the taxpayer.

The deduction under this section must not be permitted in the computation of the income of any partner, or as the case may be, any member, of such company, association of persons, or body of individuals where such assessee is a firm, any association of persons, or any body of individuals.

Article on 12a registration.