33AC. [ Reserves for shipping business. [Inserted by Act 36 of 1989, Section 5 (w.e.f. 1.4.1990).]
(1)In the case of an assessee, being [a Government company or] [Inserted by Act 21 of 1998, Section 10 (w.e.f. 1.4.1999).][a public company formed and registered in India with the main object of carrying on the business of operation of ships, there shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount not exceeding fifty per cent. of profits derived from the business of operation of ships (computed under the head "Profits and gains of business or profession" and before making any deduction under this section), as is debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account, to be utilised in the manner laid down in sub-section (2):] [Inserted by Act 36 of 1989, Section 5 (w.e.f. 1.4.1990).][Provided that where the aggregate of the amounts carried to such reserve account from time to time exceeds twice the aggregate of the amounts of the paid-up share capital, the general reserves and amount credited to the share premium account of the assessee, no allowance under this sub-section shall be made in respect of such excess:] [ Substituted by Act 20 of 2002, Section 15, for the first proviso (w.e.f. 1.4.2003).][Provided further that for five assessment years commencing on or after the 1st day of April, 2001 and ending before the 1st day of April, 2006, the provisions of this sub-section shall have effect as if for the words "an amount not exceeding fifty per cent. of profits", the words "an amount not exceeding the profits" had been substituted:] [ Inserted by Act 10 of 2000, Section 15 (w.e.f. 1.4.2001).][Provided also that no deduction shall be allowed under this section for any assessment year commencing on or after the 1st day of April, 2005.] [ Inserted by Act 23 of 2004, Section 9 (w.e.f. 1.4.2005).](2)[ The amount credited to the reserve account under sub-section (1) shall be utilised by the assessee before the expiry of a period of eight years next following the previous year in which the amount was credited-(a)for acquiring a new ship for the purposes of the business of the assessee; and(b)until the acquisition of a new ship, for the purposes of the business of the assessee other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India.(3)Where any amount credited to the reserve account under sub-section (1),-(a)has been utilised for any purpose other than that referred to in clause (a) or clause (b) of sub-section (2), the amount so utilised; or(b)has not been utilised for the purpose specified in clause (a) of sub-section (2), the amount not so utilised; or(c)has been utilised for the purpose of acquiring a new ship as specified in clause (a) of sub-section (2), but such ship is] [sold or otherwise transferred, other than in any scheme of demerger] [ Substituted by Act 27 of 1999, Section 14, for " sold or otherwise transferred" (w.e.f. 1.4.2000).][by the assessee to any person at any time before the expiry of ] [Inserted by Act 36 of 1989, Section 5 (w.e.f. 1.4.1990).] [three years] [ Substituted by Act 32 of 2003, Section 17, for " eight years" (w.e.f. 1.4.2004).][from the end of the previous year in which it was acquired, the amount so utilised in acquiring the ship, shall be deemed to be the profits,-(i)in a case referred to in clause (a), in the year in which the amount was so utilised; or(ii)in a case referred to in clause (b), in the year immediately following the period of eight years specified in sub-section (2); or(iii)in a case referred to in clause (c), in the year in which the sale or transfer took place, and shall be charged to tax accordingly.](4)[ Where the ship is sold or otherwise transferred (other than in any scheme of demerger) after the expiry of the period specified in clause (c) of sub-section (3) and the sale proceeds are not utilised for the purpose of acquiring a new ship within a period of one year from the end of the previous year in which such sale or transfer took place, ] [Inserted by Act 32 of 2003, Section 17 (w.e.f. 1.4.2004).][so much of such sale proceeds which represent the amount credited to the reserve account and utilised for the purposes mentioned in clause (c) of sub-section (3)] [ Substituted by Act 18 of 2005, Section 9, for " such sale proceeds" (w.r.e.f. 1.4.2004).][shall be deemed to be the profits of the assessment year immediately following the previous year in which the ship is sold or transferred.] [Inserted by Act 32 of 2003, Section 17 (w.e.f. 1.4.2004).][Explanation. - For the purposes of this section,-(a)"public company" shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956);] [Now section 2(71) of the Companies Act, 2013.](aa)[ "Government company" shall have the meaning assigned to it in section 617 of the Companies Act, 1956 (1 of 1956);] [ Inserted by Act 18 of 1992, Section 12 (w.e.f. 1.4.1993).] [Now section 2(45) of the Companies Act, 2013.](b)[ "new ship" shall have the same meaning as in clause (ii) of sub-section (2) of section 32AB.] [Inserted by Act 36 of 1989, Section 5 (w.e.f. 1.4.1990).]
