Tonnage tax scheme in respect of a qualifying ship cannot be denied merely because it is used for transportation of cargo between Indian ports which are connected by rail / road

ACIT Vs West Asia Maritime Ltd. (ITAT Chennai) (Third Member)- The contention of the assessing authority that the ship was excluded from the ambit of tonnage tax scheme mainly for the reason that the ship is rendering services only between Indian ports, which would have also been rendered on land by road or rail, is too far-fetched. There is no such stipulation anywhere in law.

• The law is not making any reference to any other alternative method available for transportation of goods and cargo from destination to destination. The law only says that an assessee is entitled to opt for TTS if it is operating qualifying ship and satisfies other conditions provided therein. The law does not say that the ship should always do its voyage between international ports.
• The operating character of the ship is not at all changed only for the reason that the ship is navigating only through Indian coastal waters
• Merely because reliance is placed on examples taken from British law it does not mean that it is not relevant to Indian law. The normal interpretation of the provision makes it clear that the restriction provided in subsection (i) applies only to those provisions of goods or services unrelated to the core activities of operating ship.
• Accordingly, the Tribunal (Third Member) held that the ship operating in Indian coastal waters is a “qualifying ship” under section 115VD of the Act and entitled to benefits of TTS.