Chapter V.

Miscellaneous and General.

58. —(1) Any claim by a person for an allowance falling to be made to him under any of the provisions of this Part of this Act in charging the profits or gains of his trade shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains thereof, and the allowance shall be made as a deduction in charging those profits or gains, and paragraph (3) of Rule 6 of the Rules applicable to Cases I and II of Schedule D and section 4 of Finance Act, 1937 , shall apply in relation to the allowance as they apply in relation to deductions allowable in respect of wear and tear of machinery and plant.

(2) Any charge falling to be made under any of the provisions of this Part of this Act on a person for any year of assessment in charging the profits or gains of his trade shall be made by means of an assessment in addition to any other assessment falling to be made thereon for that year.

(3) The preceding provisions of this section shall apply in relation to professions, employments, vocations and offices as they apply in relation to trades.

59. —(1) Where, under any of the provisions of this Part of this Act, an allowance falls to be made to a person for any year of assessment which is to be given by way of discharge or repayment of tax, and is to be available, or available primarily, against a specified class of income, the amount of the allowance shall be deducted from or set off against income of his of that class for that year of assessment, and, if the amount to be allowed is greater than the amount of his income of that class for that year of assessment, the balance shall be deducted from or set off against his income of that class for the next year of assessment, and so on for subsequent years of assessment, and tax shall be discharged or repaid accordingly:

Provided that where the allowance is available primarily against income of the specified class and the amount of the allowance is greater than the amount of the person's income of that class for the first-mentioned year of assessment, he may, by notice in writing given to the inspector of taxes not later than one year after the end of the year of assessment, elect that the excess shall be deducted from or set off against his other income for that year of assessment, and it shall be deducted from or set off against that income and tax discharged or repaid accordingly and only the excess, if any, of the amount of the allowance over all his income for that year of assessment shall be deducted from or set off against his income of the specified class for succeeding years.

(2) Subsection (2) of section 5 of the Income Tax Act, 1918, shall apply in relation to the allowances mentioned in subsection (1) of this section as it applies in relation to the allowances and adjustments mentioned in that subsection.

(3) Any claim for such an allowance as is mentioned in subsection (1) of this section shall be made to and determined by the inspector of taxes, but any person aggrieved by any decision of the inspector of taxes on any such claim may, on giving notice in writing to the said inspector within twenty-one days after the notification to him of the decision, appeal to the Special Commissioners.

(4) The Special Commissioners shall hear and determine an appeal to them under subsection (3) of this section as if it were an appeal against an assessment to income tax, and the provisions of the Income Tax Acts relating to the rehearing of an appeal and the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly.

(5) If any person, for the purpose of obtaining for himself or any other person any relief from or repayment of tax in respect of such an allowance as is mentioned in subsecton (1) of this section, knowingly makes any false statement or false representation, he shall be liable to a penalty of five hundred pounds.

60. —(l) In this Part of this Act, “basis period” has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to or on whom an allowance or charge falls to be made in charging the profits or gains of his trade, his basis period for any year of assessment is the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of any Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade—

(a) where two basis periods overlap, the period common to both shall be deemed for the purpose of this subsection to fall in the first basis period only,

(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the secondmentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period, and

(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) Any reference in the proviso to subsection (2) of this section to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

(4) Where an allowance or charge falls to be made under Chapter II of this Part of this Act to or on a person carrying on or holding a profession, employment, vocation or office, the provisions of the preceding subsections of this section shall apply as if the references to a trade included references to a profession, employment, vocation or office and as if the reference to Case I of Schedule D included references to Case II of Schedule D and to Schedule E.

(5) In the case of any other person to or on whom an allowance or charge falls to be made under this Part of this Act, his basis period for any year of assessment is the year of assessment itself.

61. —(1) Any reference in this Part of this Act to the sale of any property includes a reference to the sale of that property together with any other property and, where property is sold together with other property, so much of the net proceeds of the sale of the whole property as, on a just apportionment is properly attributable to the first-mentioned property shall, for the purposes of this Part of this Act, be deemed to be the net proceeds of the sale of the first-mentioned property, and references to expenditure incurred on the provision or the purchase of property shall be construed accordingly.

For the purposes of this subsection, all the property which is sold in pursuance of one bargain shall be deemed to be sold together, notwithstanding that separate prices are or purport to be agreed for separate items of that property or that there are or purport to be separate sales of separate items of that property.

(2) The provisions of subsection (1) of this section shall, with the necessary adaptations, apply in relation to other sale, insurance, salvage or compensation moneys as they apply in relation to the net proceeds of sales.

(3) This Part of this Act shall have effect as if any reference therein (including any reference in the preceding provisions of this section) to the sale of any property included a reference to the exchange of any property and, in the case of a leasehold interest, also included a reference to the surrender thereof for valuable consideration and any provisions of this Part of this Act referring to sales shall have effect accordingly with the necessary adaptations and, in particular, with the adaptations that references to the net proceeds of sale and to the price shall be taken to include references to the consideration for the exchange or surrender and references to capital sums included in the price shall be taken to include references to so much of the consideration as would have been a capital sum if it had taken the form of a money payment.

(4) As respects any year of assessment beginning on or after the commencement of this Part of this Act, the preceding provisions of this section shall, with the necessary adaptations, have effect in relation to—

(a) Rules 6 and 7 of the Rules applicable to Cases I and II of Schedule D, and

(b) Part V of Finance Act, 1956 ,

as if the said Rules 6 and 7 and the said Part V were provisions of this Part of this Act.

62. —(1) The provisions of this section shall have effect in relation to sales of any property where either—

(a) the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them, or

(b) it appears with respect to the sale or with respect to transactions of which the sale is one, that the sole or main benefit which, apart from the provisions of this section, might have been expected to accrue to the parties or any of them was the obtaining of an allowance or deduction under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D, Part V of Finance Act, 1956 , or any of the provisions of this Part of this Act.

References in this subsection to a body of persons include references to a partnership.

(2) Where the property is sold at a price other than that which it would have fetched if sold in the open market, then, subject to the provisions of subsections (3) and (4) of this section, the like consequences shall ensue for the purposes of the enactments mentioned in subsection (1) of this section, in their application to the income tax of all persons concerned, as would have ensued if the property had been sold for the price which it would have fetched if sold in the open market.

(3) Where the sale is a sale of machinery or plant—

(a) no initial allowance shall be made to the buyer, and

(b) subject to the provisions of subsection (4) of this section, if the price which the property would have fetched if sold in the open market is greater than the amount which, for the purpose of determining whether any, and if so, what, balancing charge should be made on the seller in respect of the property under Chapter II of this Part of this Act, would be taken to be the amount of the capital expenditure incurred by the seller on the provision of the property, subsection (2) of this section shall have effect as if for each of the references to the price which the property would have fetched if sold in the open market there were substituted a reference to the said amount:

Provided that this subsection shall not apply in relation to a sale of machinery or plant which was never used if the business or part of the business of the seller was the manufacture or supply of machinery or plant of that class and the sale was effected in the ordinary course of the seller's business.

(4) (a) Subject to subsection (5) of this section, where the sale is one to which paragraph (a) of subsection (1) of this section applies and paragraph (b) of that subsection does not apply, and the parties to the sale by notice in writing to the inspector of taxes so elect, the following provisions shall have effect:

(i) subsection (2) of this section shall have effect as if, for each of the references to the price which the property would have fetched if sold in the open market, there were substituted a reference to that price or to the sum hereinafter mentioned, whichever is the lower,

(ii) paragraph (b) of subsection (3) of this section shall not apply, and

(iii) notwithstanding anything in the preceding provisions of this section, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have fallen to be made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances or deductions in connection therewith as were done by or allowed to the buyer.

(b) The sum referred to in subparagraph (i) of paragraph (a) of this subsection is—

(i) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with the provisions of section 27 of this Act,

(ii) in the case of machinery or plant, the amount of the expenditure on the provision thereof still unallowed immediately before the sale, computed in accordance with the provisions of section 36 of this Act,

(iii) in the case of patent rights, the amount of the capital expenditure on the acquisition thereof remaining unallowed, computed in accordance with the provisions of section 48 of this Act.

(5) An election under paragraph (a) of subsection (4) of this section may not be made if—

(a) any of the parties to the sale is not resident in the State at the time of sale, and

(b) the circumstances are not at that time such that an allowance or charge under this Part of this Act falls or might fall to be made to or on that party in consequence of the sale,

but, except as aforesaid, this section shall have effect in relation to a sale notwithstanding that it is not fully applicable by reason of the non-residence of a party to the sale or otherwise.

(6) In this section “control”, in relation to a body corporate, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

63. —(1) Where, on or after the 15th day of April, 1959, a person succeeds to any trade, profession or vocation which until that time was carried on by another person and, by virtue of any of the provisions of Rule 11 of the Rules applicable to Cases I and II of Schedule D, the trade, profession or vocation is to be treated as discontinued, any property which, immediately before the succession takes place, was in use for the purposes of the discontinued trade, profession or vocation and, without being sold, is immediately after the succession takes place, in use for the purposes of the new trade, profession or vocation, shall, for the purposes of this Part of this Act, and of Rules 6 and 7 of the Rules applicable to Cases I and II of Schedule D, be treated as if it had been sold to the successor when the succession takes place, and as if the net proceeds of that sale had been the price which that property would have fetched if sold in the open market.

(2) Where, after the setting up and before the permanent discontinuance of a trade, profession or vocation which at any time is carried on in partnership anything is done for the purposes thereof, any allowance or charge which, if the trade, profession or vocation had at all times been carried on by one and the same person, would have fallen to be made to or on him under any of the provisions of this Part of this Act, shall be made to or on the person or persons from time to time carrying on that trade, profession or vocation, and the amount of any such allowance or charge shall be computed as if that person or those persons had at all times been carrying on the trade, profession or vocation and as if everything done to or by his or their predecessors in the carrying on thereof had been done to or by him or them.

(3) In relation to machinery or plant this section shall have effect subject to the provisions of Chapter II of this Part of this Act.

64. —(1) Where, under or by virtue of any provisions of this Part of this Act, any sum falls to be apportioned and, at the time of the apportionment, it appears that it is material as respects the liability to income tax (for whatever year of assessment) of two or more persons, any question which arises as to the manner in which the sum is to be apportioned shall be determined, for the purposes of the income tax of all those persons, by the Special Commissioners, in like manner as if it were an appeal against an assessment to income tax under Schedule D, and the provisions of the Income Tax Acts relating to such an appeal shall apply accordingly with any necessary modifications:

Provided that all the said persons shall be entitled to appear and be heard by the Special Commissioners or to make representations to them in writing.

(2) This section applies in relation to any determination for the purposes of this Part of this Act of the price which property would have fetched if sold in the open market as it applies in relation to apportionments.

65. —(1) Where an event occurs which gives rise, or would, but

for this section, give rise to a balancing allowance or balancing charge in respect of any property to or on a company in relation to which a certificate under subsection (2) of section 3 of Finance (Miscellaneous Provisions) Act, 1958 , has been given, then, whether the certificate is still in force or not, the following provisions of this section shall apply.

(2) If the property has been used by the company exclusively for the purposes of its exempted trading operations within the meaning of Part II of the said Act, no balancing allowance or balancing charge shall be made.

(3) If the property has been used partly for the purposes of the company's exempted trading operations and partly for the purposes of its other trading operations, regard shall be had to all the relevant circumstances of the case and there shall be made to or on the company an allowance of such an amount, or, as the case may be, a charge on such an amount, as may be just and reasonable.

66. —(1) References in this Part of this Act to capital expenditure and capital sums—

(a) in relation to the person incurring the expenditure or paying the sums, do not include any expenditure or sum which is allowed to be deducted in computing, for the purposes of income tax, the profits or gains of a trade, profession, office, employment or vocation carried on or held by him, and

(b) in relation to the person receiving the amounts expended or the sums in question, do not include references to any amounts or sums which fall to be taken into account as receipts in computing the profits or gains of any trade, profession, office, employment or vocation carried on or held by him,

and do not include, in relation to any such person as aforesaid, any expenditure or sum in the case of which a deduction of tax falls or may fall to be made, otherwise than by virtue of the provisions of Chapter III of this Part of this Act relating to charges on capital sums received for patent rights, under Rule 19 or Rule 21 of the General Rules.

(2) Any reference in this Part of this Act to the date on which expenditure is incurred shall be construed as a reference to the date when the sums in question become payable.

(3) Expenditure shall not be regarded for any of the purposes of this Part of this Act as having been incurred by any person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority:

Provided that in considering whether any and, if so, what, balancing charge is to be made on a person under Chapter II of this Part of this Act in respect of any machinery or plant provided before the 15th day of April, 1959, this subsection shall not apply.

67. —(1) In this Part of this Act, except where the context otherwise requires—

“income” includes any amount on which a charge to tax is authorised to be made under any of the provisions of this Part of this Act;

“lease” includes an agreement for a lease where the term to be covered by the lease has begun, and any tenancy, but does not include a mortgage, and “lessee”, “lessor” and “leasehold interest” shall be construed accordingly;

“sale, insurance, salvage or compensation moneys” mean, in relation to an event which gives rise or might give rise to a balancing allowance or a balancing charge to or on any person—

(a) where the event is a sale of any property, the net proceeds to that person of the sale,

(b) where the event is the demolition or destruction of any property, the net amount received by him for the remains of the property, together with any insurance moneys received by him in respect of the demolition or destruction and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums,

(c) as respects machinery or plant, where the event is the permanent loss thereof otherwise than in consequence of its demolition or destruction, any insurance moneys received by him in respect of the loss and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums, and

(d) where the event is that a building or structure ceases altogether to be used, any compensation of any description received by him in respect of that event, in so far as that compensation consists of capital sums,

(2) Any reference in this Part of this Act to any building, structure, machinery or plant shall be construed as including a reference to a part of any building, structure, machinery or plant.

(3) The provisions of this Part of this Act shall apply in relation to a share in machinery or plant as they apply in relation to a part of machinery or plant, and for the purposes of those provisions a share in machinery or plant shall be deemed to be used for the purposes of a trade so long as, and only so long as, the machinery or plant is used for the purposes thereof.

(4) Any reference in this Part of this Act to the time of any sale shall be construed as a reference to the time of completion or the time when possession is given, whichever is the earlier.

(5) Any reference in this Part of this Act to the setting up or permanent discontinuance of a trade includes, except where the contrary is expressly provided, a reference to the occurring of any event which, under any of the provisions of the Income Tax Acts, is to be treated as equivalent to the setting up or permanent discontinuance of a trade.

(6) Any reference in this Part of this Act to an allowance made or deduction allowed includes a reference to an allowance or deduction which would be made or allowed but for an insufficiency of profits or gains, or other income, against which to make it.

68. —(1) Finance Act, 1958 , is hereby amended as follows:

(i) in subsection (8) of section 40 “or” shall be deleted at the end of paragraph (b) and there shall be added after paragraph (c):

“or

(d) income treated as earned income by virtue of section 53 of the Finance Act, 1959,”;

(ii) in subsection (3) of section 41 , “or” before “ Part V of Finance Act, 1957 ” shall be deleted and “or Part V of the Finance Act, 1959,” shall be inserted before “and references to income”;

(iii) in clause (b) of subparagraph (3) of paragraph 5 of the Third Schedule, “or” before “ Part V of Finance Act, 1957 ” shall be deleted and “or Part V of the Finance Act, 1959,” shall be inserted before “for any year of assessment”.

(2) Subsection (2) of section 8 of Finance (Miscellaneous Provisions) Act, 1958 , is hereby amended by the addition at the end of the subsection of “or any annual allowances under Chapter or Chapter III, or Chapter IV of Part V of the Finance Act, 1959”.

69. —(1) Where any of the following allowances:

(a) an allowance under Rule 6 of the Rules applicable to Cases I and II of Schedule D,

(b) an allowance under subsection (3), or paragraph (b) of subsection (4), of section 5 or section 6 of Finance Act, 1946 ,

(c) an allowance under Part V of Finance Act, 1956 , in respect of expenditure incurred after the commencement of this Part of this Act,

(d) an allowance under Part IV of Finance (Miscellaneous Provisions) Act, 1956 , in respect of expenditure incurred after the commencement of this Part of this Act,

(e) an annual allowance or a balancing allowance under Chapter I , II or III of this Part of this Act, or

(f) an initial allowance, annual allowance or other allowance under Chapter IV of this Part of this Act,

is made to any company for the purposes of income tax for any year of assessment and the allowance is related to any business carried on by that company, the appropriate amount shall be deducted in computing the profits of the business for the purposes of corporation profits tax for any accounting period (being an accounting period ending on or after the commencement of this Part of this Act) any part of which falls within that year of assessment.

(2) For the purposes of subsection (1) of this section, an allowance shall be treated as related to a business if, and only if, either—

(a) it is made in charging the profits or gains of a trade which is, or is comprised in, that business,

(b) it is made in charging the profits or gains of a trade and is so made in respect of, or of expenditure on, property used for the purposes of a part of the trade which is, or is comprised in, that business, or

(c) it is an allowance made by way of discharge or repayment of tax under or by virtue of any of the provisions of this Part of this Act and is in respect of, or of expenditure on, property the rent of which is included in the profits of the business for the purposes of corporation profits tax for any period or would have been so included if there had been any such rent.

(3) Where any of the following charges:

(a) a balancing charge under Chapter I , II or III of this Part of this Act, or

(b) a charge under section 50 of this Act,

is made on any company for the purposes of income tax for any year of assessment, and the charge is related to a business, the appropriate amount shall be treated as a trading receipt in computing the profits of the business for the purposes of corporation profits tax for any accounting period any part of which falls within that year of assessment.

(4) For the purposes of subsection (3) of this section, a charge shall be treated as related to a business if, and only if, either—

(a) it is made in charging the profits or gains of a trade which is, or is comprised in, that business,

(b) it is made in charging the profits or gains of a trade and is a balancing charge in respect of, or of expenditure on, property used for the purposes of a part of the trade which is, or is comprised in, that business,

(c) it is a balancing charge in respect of, or of expenditure on, property the rent of which is included in the profits of the business for the purposes of corporation profits tax for any accounting period or would have been so included if there had been any such rent, or

(d) it is a charge under section 50 of this Act and the patent rights in question have at any time been used for the purposes of the business.

(5) In subsections (1) and (3) of this section “the appropriate amount” shall be construed as follows:

(a) in a case in which the business commenced or discontinued during the year of assessment in question, the said expression—

(i) if no more than one accounting period of the business falls, whether wholly or partly within the year of assessment, means the whole amount of the allowance or, as the case may be, the whole amount on which the charge is made, and

(ii) if more than one accounting period of the business falls, whether wholly or partly, within the year of assessment, means, in relation to each such accounting period, the portion of the allowance, or, as the case may be, the portion of the amount on which the charge is made, which bears to the whole thereof the same proportion as the length of the said accounting period, so far as included in the said year of assessment, bears to the total length of all such accounting periods, so far as so included;

(b) in any other case, the said expression—

(i) where the year of assessment in question and the accounting period in question coincide, means the whole amount of the allowance, or, as the case may be, the whole amount on which the charge is made, and

(ii) where part only of the year of assessment falls within that accounting period, means such portion of the allowance or, as the case may be, such portion of the amount on which the charge is made as is apportioned to that part of the year of assessment which falls within that accounting period.

(6) Where the profits of a business are not chargeable or not wholly chargeable to income tax, the like deductions and additions shall be made under subsections (1) and (3) of this section in computing the profits of the business for the purposes of corporation profits tax (being deductions and additions in respect of matters in respect of which no deductions or additions otherwise fall to be made under those subsections respectively) as would have fallen to be made for income tax purposes if the profits of the business had been so chargeable or wholly so chargeable.

(7) Where, under this section, an amount falls to be apportioned to a part of a year of assessment or accounting period, the apportionment shall be made by reference to the number of months or fractions of months contained in that part, and in the remainder, of that year or period.

(8) In this section—

(a) “business” means any trade or business or any undertaking of a similar character the profits whereof are profits to which Part V of the Finance Act, 1920, applies, and

(b) any reference to an allowance made for any year of assessment does not include a reference to any amount carried forward from any previous year of assessment.

(9) In relation to any accounting period ending on or after the commencement of this Part of this Act—

(a) paragraph (e) of the proviso to subsection (2) of section 53 of the Finance Act, 1920, shall cease to have effect in so far as it is inconsistent with the provisions of this section, and

(b) section 27 of Finance Act, 1956 , and section 20 of Finance (Miscellaneous Provisions) Act, 1956 , shall cease to have effect as respects expenditure incurred after such commencement.