Income-tax Act, 2025

Depreciation and gains relating to tonnage tax assets. - Section 229

Depreciation and gains relating to tonnage tax assets.

229. (1) For the purposes of computing depreciation under section 230(1)(d), the depreciation for the first tax year of the tonnage tax scheme (herein referred to as the first tax year) shall be computed on the written down value of the qualifying ships as specified under sub-section (2).

(2) The written down value of the block of assets, being ships or inland vessels, as the case may be, as on the first day of the first tax year, shall be divided in the ratio of the book written down value of the qualifying ships (herein referred to as the qualifying assets) and the book written down value of the non-qualifying ships (herein referred to as the other assets), as per the following formula:

where,

D = the written down value of the block of qualifying assets as on the first day of the tax year;

E = the written down value of the block of other assets as on the first day of the tax year;

A = the written down value of the existing block of assets, being ships or inland vessel, as the case may be, as on the first day of the tax year;

B = the aggregate of book written down value of qualifying assets as on the last day of the preceding tax year; and

C = the aggregate of the book written down value of other assets as on the last day of the preceding tax year.

(3) The block of qualifying assets as determined under sub-section (2) shall constitute a separate block of assets for the purposes of this Part.

(4) Where an asset forming part of a block of,

(a)

qualifying assets begins to be used for purposes other than the tonnage tax business, an appropriate portion of the written down value allocable to such asset shall be reduced from the written down value of that block and shall be added to the block of other assets as per the following formula:

where,

A = the appropriate portion of the written down v .... To read the full section download the app from Google Play store