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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Tax Planning and Business Restructuring

A planner is advising on the amalgamation of a qualifying shipping company, Kaveri Ships Ltd, into a company that is not a tonnage tax company. Which action is consistent with section 233 of the Income-tax Act, 2025?

The amalgamated company should exercise the option under section 231(1) within three months from the date the scheme is approved. Section 233(2) requires this where the company is not already a tonnage tax company, so there is no automatic status and no longer window.

  1. AThe amalgamated company automatically becomes a tonnage tax company without any option
  2. BThe amalgamated company should exercise the option under section 231(1) within three months from approval of the schemeCorrect
  3. CThe amalgamated company may exercise the option at any time in the next five years
  4. DThe amalgamated company must apply to the Tribunal for the option within one year of the scheme

Explanation

Section 233(1) applies the scheme to a qualifying amalgamated company as far as may be. Section 233(2) requires a company that is not already a tonnage tax company to exercise the option under section 231(1) within three months from approval of the scheme. Automatic status, a five-year window and a Tribunal application are not stated.

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