TMI Blog2008 (2) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, "the Act", for short, providing special provisions relating to the income of shipping companies, as per the Finance Act, 2004, hereinafter referred to as "the Finance Act." 2. Chapter XII-G of the Act provides, among other things, a tonnage tax scheme, which is optional. That Chapter, comprising sections 115V to 115VZC, was inserted in the Act, with effect from April 1, 2005. 3. The petitioner opted for the tonnage tax scheme by making an application in terms of section 115VP of the Act. The first respondent, Additional Commissioner, issued exhibit P5 decision rejecting that application. This is under challenge. 4. The petitioner-company alleges that it acquired four ships between 1995 and 2001 and that it has been regularly assessed to income-tax in respect of income earned by it, including the income from the business of operating ships. It has also pleaded the particulars of income earned by it in respect of the business relating to the operation of ships between 1995-96 and 2003-04. On the basis of such pleadings, it is asserted that the view taken in the impugned exhibit P5 refusing to accept the option of the petitioner for the tonnage tax scheme is without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the petitioner that, if at all there is any ambiguity in the matter of construing section 115VC, the statement of the Minister, introducing the Bill, clearly throws light removing it. It was also argued that if among two competing constructions, one results in equity rather than in the injustice that would arise out of the other, then the former, which advances justice, should be preferred to the literal construction. It was argued that the petitioner is a company incorporated way back in 1935 and obviously, had, within the concept of its memorandum and articles, all business activities as could be conceived from the point of view of a company, then established in Madras, during the British regime and that for determining the "main object of the company", at this distant point of time, mere reference to its memorandum and articles is insufficient, it is argued that the real thrust of the business activities that the company carries on at the relevant time, that is, while it seeks option under Chapter XII-G of the Act, has to be reckoned. On the basis of such contention, it is argued that the provisions of Chapter XII-G, having been introduced with effect from April ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of an alternative remedy by way of an appeal may not be considered as the sole ground on which the questions of law raised in this writ petition should go undecided by this constitutional court. 10. The impugned exhibit P5 has been issued on the ground that on consideration of the facts and evidence produced by the assessee, it cannot be considered that the main object of the company is to carry on the business of operating ships. The impugned order states that on verification of the annual report for the year 2003-04, it is seen that the assessee is engaged in operation of different divisions, namely, civil engineering division, clearing and forwarding division, inland water transport, granite division, windmill division, shipping division and textile division and that the profit and loss account for the year ended March 31, 2003, and March 31, 2004, would show that out of the gross income of Rs. 3,30,39,61,852 for the year ended March 31, 2004, the ship charter income is Rs. 49,57,91,037 and out of Rs. 3,26,32,12,101 for the year ended March 31, 2003, the ship charter income is Rs. 30,84,67,989. The first respondent accordingly concluded that as per the details availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for tonnage tax scheme. By section 115VC, a qualifying company for the purpose of Chapter XII-G, is one which is an Indian company; with the place of its effective management being in India; owns at least one qualifying ship and the main object of which is to carry on the business of operating ships. The company satisfying the bench mark fixed in section 1I5VC would, thus, be treated as a qualifying company to sustain its application under section 115VP for the approval of the option for tonnage tax scheme, which coverage would immediately be referable to section 115VA. The overwhelming thrust of section 115VA is the derivation of income from the business of operating qualifying ships. The concept of "the main object of the company" in section 115VC(d), in the absence of any provision to the contrary in Chapter XII-G, has necessarily to be understood in the manner in which that term is understood in common parlance, without being tied down to any requirement of the Companies Act to classify the objects of a company into principal and ancillary and show them distinctly in the object clauses in the memorandum of association of the company. In the context of business operations by co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth Manufacturers' Association [1980] 121 ITR 1 (SC); [1980] 2 SCC 31, held that the speech made by the mover of the Bill explaining the reasons for introduction of the Bill can be referred to for the purpose of ascertaining the object and purpose for which the legislation is enacted. It was noticed that this is in accord with the recent trend in juristic thought in the Western countries, as also in India, that the interpretation of statutes being an exercise in ascertaining the meaning, everything which is logically relevant should be admissible. In Kerala State Industrial Development Corporation Ltd. v. CIT [2003] 259 ITR 51 (SC); [2003] 11 SCC 363, the apex court referred to the budget speech of the Finance Minister while introducing the Finance Bill to hold that the speech can be relied upon to throw light on the object and purpose of the particular provisions introduced by the Finance Bill even if there is any ambiguity in the matter. 15. In the light of the conclusions arrived at on a plain reading of the provisions, supported by the speech of the Finance Minister introducing the Bill, it has necessarily to be concluded that the decision in exhibit P5 to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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