26.The following new section is hereby inserted immediately after section 72 of the principal enactment and shall have effect as section 72A of that enactment:-
| 72A.
| | (1) Notwithstanding the provisions contained in section 72, every partnership shall be charged with income tax on the aggregated amount of the divisible profits as referred to in section 71 and other income, at the appropriate rate given in the Sixth Schedule to this Act for each year of assessment commencing on or after April 1, 2004, and such tax shall be paid by the partnership in quarterly installments as provided for in Chapter XIII, subject to the provisions of this section. | | |
| | (2) Where there is a divisible loss for any year of assessment, the tax shall be charged on the total amount of other income, without any set off of such divisible loss from such other income. | | |
| | (3) Notwithstanding anything to the contrary in any other provisions of this Act. the share of the tax paid (other than any tax in default recovered) under subsection (1), less any amount set off against the Economic Service Charge paid by the partnership for that year that is attributable to each partner using the profit sharing ratio of the partnership for that year of assessment, may be set-off against the income tax liability of such partner of such partnership for the same year of assessment on such share of profit and other income from such partnership, without any right to a refund or carry forward of any excess of such share of tax attributable to such partner. | | |
| | (4) Any quarterly instalment of tax payable as provided for in Chapter XIII of this Act subject to the provisions of this section and not paid on or before the due date, shall be a tax in default for the purposes of this Act and recovery action under Chapter XXII of this Act may be instituted by the Commissioner -General under that Chapter against any or all of the partners of such partnership for the recovery of such tax in default. | | |
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Sri Lanka Consolidated Acts