Inland Revenue Act (No. 28 of 1979)

Sri Lanka Consolidated Acts

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Inland Revenue Act (No. 28 of 1979) - Sect 29

Deductions from total statutory income in arriving at assessable income

29.

(1) The assessable income of a person for any year of assessment shall be his total statutory income for that year subject to the deductions specified in this section.

(2) There shall be deducted from the total statutory income of a person for any year of assessment-

	(a) sums payable by him for that year of assessment by way of annuity, ground rent, royalty or interest not deductible under section 23 :

	(b) the amount of a loss, other than a capital loss or a loss referred to in subsection (7) incurred by him in any trade, business, profession or vocation during any year of assessment which if it had been a profit would have been assessable under this Act, or the Inland Revenue Act, No. 4 of 1963, and which has not been allowed against his statutory income of a previous year under those Acts :

(3)

(a) Where the profits and income of an undertaking were exempt from income tax under section 16 of this Act or under section 6 of the Inland Revenue Act, No. 4 of 1963, for any period (such period being referred to in this para graph as the exempt period), there shall be deducted from the total statutory income of the person who carries on that undertaking in the first year of assessment in which such exemption ceases to apply, the excess, if any, of-

(i) the total of any losses incurred by such person in such undertaking in any year of assessment during the exempt period, over

(ii) such profits and income of that undertaking as were exempt from income tax for any year of assessment during the exempt period succeeding the year of assessment in which such loss in that undertaking was incurred.

	(b) Where the entirety or any portion of the balance of such losses referred to in paragraph (a) cannot be deducted from the total statutory income of such person for such first year of assessment, such entirety or portion shall be deducted from his total statutory income for the next succeeding year of assessment and so on.

(4)

(a) Notwithstanding anything to the contrary in this section any loss incurred in any undertaking referred to in section 18 by any person carrying on that undertaking in any year of assessment from the date of commencement of that undertaking to March 31, 1983, shall be deducted only from such part of the total statutory income of that person for any year of assessment commencing prior to April 1, 1983, as constitutes the statutory income of that person from that undertaking:

(b) In computing the assessable income of the person carrying on any undertaking referred to in section 17 or section 18 or section 19 for the year of assessment commencing on April 1, 1983, there shall be deducted the total of the losses incurred in that undertaking in any year of assessment commencing prior to April 1, 1983, during which such person carried on that undertaking, after deducting therefrom the aggregate of-

(i) any part of such losses incurred in that undertaking as has been deducted under paragraph (a) from the statutory income of such person for any year of assessment commencing prior to April 1, 1983, and

(ii) such profits and income of that undertaking as were exempt from income tax for any year of assessment succeeding the year of assessment in which such loss in that undertaking was Incurred.

	(c) Where the loss referred to in paragraph (b) or part thereof cannot be deducted from the total statutory income of a person for the year of assessment commencing on April 1, 1983, such loss or such part of such loss shall be deducted from the total statutory income of that person for the next year of assessment, and so on.

(5) Where at any time within the three years of assessment immediately succeeding any year of assessment any person ceases to carry on any trade, business, profession or vocation, he shall on his making an application in that behalf to the Commissioner-General, be entitled to a deduction from the statutory income for that year of assessment of the amount of a loss other than a capital loss or a loss referred to in subsection (7), incurred by him in that trade, business, profession or vocation in any of those three years which, if it had been a profit, would have been assessable under this Act, and which has not been allowed against his statutory income of any year of assessment. For the purpose of allowing that deduction, the assessable income of that person for that year of assessment shall, notwithstanding anything in section 123 be revised:

(6)

	(a) There shall be deducted from the total statutory income of a person for any year of assessment if such income includes capital gains, the amount of any capital loss of that person for that year of assessment, which if it had been a profit would have been assessable under this Act.

(b) " Capital loss "

(i) with reference to the capital loss of a person arising from a change of ownership of any property, means, subject to the provisions of subsection (4) of section 7, the amount by which the value of that property at the time when such change of owner ship occurs is less than its value at the time when it was acquired by that person;

(ii) with reference to the capital loss of any person arising from the redemption of any shares, debentures or other obligations, means, subject to the provisions of subsection (4) of section 7, the amount by which the value of all property received by him in consequence of such redemption is less than the value of that which is redeemed at the time of its acquisition or where that which is redeemed is any property referred to in paragraph (e) or paragraph (f) or paragraph (g) or paragraph (h) of subsection (3) of section 7, is less than such value of that property as is specified in that paragraph ;

(iii) with reference to the capital loss of any person arising from the dissolution of a business or the liquidation of a company, means, subject to the provisions of subsection (4) of section 7, the amount by which the value of all property received by him in consequence of such dissolution or liquidation is less than the value of his share of the capital of such business or company at the time when such share was acquired by him,

	(c) In computing the amount of a capital loss any expenditure of the description referred to in paragraphs (a), (b) or (c) of subsection (4) of section 7 shall be taken into account.

(d)

(i) Where a person dies and he has any capital loss for the last year of assessment for which he was liable to be assessed for income tax, the amount of such capital loss shall, as far as is practicable, be deducted from his statutory income from all sources for such last year of assessment, and, if it cannot be so deducted, from his statutory income from all sources for any of the three years of assessment in order of recession immediately preceding such last year of assessment.

(ii) Where a deduction is made from the statutory income of any person for any year of assessment under sub- paragraph (i), the tax for that year of assessment in respect of him shall, notwithstanding anything in section 123, be revised taking into consideration such deduction and the amount of the difference between the amount of the tax paid by him in respect of that year of assessment and the amount of the revised tax for that year of assessment shall, if there is an executor of the deceased, be refunded to such executor, and, if there is no such executor, be refunded to such person or persons as is or are in the opinion of the Commissioner-General, entitled to such refund.

	(e) In computing the capital loss of a person under this subsection, the provisions of subsection (3) of section 7 shall apply as though for the expressions " capital gain " or " gain " occurring in that subsection, there were substituted the expressions " capital loss " or " loss ".

(7) There shall be deducted from the total statutory income of a person for any year of assessment, where such income includes profits and income from the business of racing horses, any loss for any year of assessment from the business of racing of horses owned by such person, which if it had been a profit would have been assessable under this Act and which has not been so deducted from his total statutory income of a previous year:

(8) Where any person has been declared or adjudged insolvent by a competent court, no loss incurred prior to the date of bankruptcy or insolvency shall be deducted from income arising after such date.

(9) The amount of a loss from any trade, business, profession or vocation shall be ascertained in the manner provided in this Act for ascertainment of profits from a trade, business, profession or vocation.

(10) Where the total statutory income of any child for any year of assessment is aggregated with, and deemed to be a part of, the total statutory income of his parent for that year of assessment, any sum which could be deducted from the total statutory income of such child under the provisions of this section shall be deducted from the total statutory income of such parent.

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