Skip to content

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

Ocean Carriers Pvt Ltd, an Indian company with its board deciding in Mumbai, owns a registered seagoing ship of 10,000 net tonnage with a valid tonnage certificate and operates ships as its main object. It plans to convert the ship into a pleasure craft for corporate sport and recreation, hoping to stay a tonnage tax company. Under section 235, which statement is correct?

A pleasure craft is excluded from the definition of qualifying ship, so the company would no longer own a qualifying ship. Being Indian or having large tonnage does not cure this, and the company would cease to be a qualifying company.

  1. AIt stays qualifying because the company is Indian
  2. BA pleasure craft is excluded from a qualifying ship, so it would lack a qualifying shipCorrect
  3. CPleasure craft qualify if net tonnage exceeds fifteen
  4. DOnly fishing vessels are excluded, so it qualifies

Explanation

Section 235(i) excludes pleasure crafts, fishing vessels, factory ships, harbour and river ferries and offshore installations from a qualifying ship. A qualifying company must own at least one qualifying ship, so the conversion defeats this condition despite large tonnage and Indian status.

Did you get it right without looking?

One question tells you little. A timed set on Tax Planning and Nature of Business shows your real accuracy, how long you take and where you lose marks.

Practise Tax Planning and Nature of BusinessFree diagnostic mock

More Tax Planning and Nature of Business questions