7.
| (1) " Capital gain " means the profits or income, not being profits or income within the meaning of paragraphs (a), (g) or (i) of section 3, arising from-
| | (a) the change of ownership of any property occurring in any manner whatsoever ; | | |
| | (b) the surrender or relinquishment of any right in any property ; | | |
| | (c) the transfer of some of the rights in any property ; | | |
| | (d) the redemption of any shares, debentures or other obligations; | | |
| | (e) the formation of a company; | | |
| | (f) the dissolution of a business or the liquidation of a company; | | |
| | (g) the amalgamation or merger of two or more businesses or companies; or | | |
| | (h) any transaction in connection with the promotion of which any person who is not a party to such trans- action receives a commission or reward. | | |
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| (2) For the purposes of subsection (1) and in relation to the capital gain of any person, the profits and income arising from-
| | (a) a change of ownership of property, means, subject to the provisions of subsection (4), the amount by which the value of the property at the time when such change of ownership occurs exceeds its value at the time when it was acquired by that person; | | |
| | (b) the surrender or relinquishment of any right or the transfer of some of the rights in any property, means, subject to the provisions of subsection (4), the value of the consideration for such surrender, relinquishment or transfer; | | |
| | (c) the redemption of any shares, debentures or other obligations, means, subject to the provisions of sub section (4), the value of all property received by him in consequence of such redemption less the value of that which is redeemed at the time when it was acquired by him or where that which is redeemed is any property referred to in paragraph (e) or paragraph (f) or paragraph (g) or para graph (h) of subsection (3), less such value of that property as is specified in that paragraph; | | |
| | (d) the formation of a company, means, subject to the provisions of subsection (4), the value of the consideration received by him for any transaction in connection with the formation of such company; | | |
| | (e) the dissolution of a business or the liquidation of a company, means, subject to the provisions of sub section (4), the amount by which the value of all property received by him in consequence of such dissolution or liquidation exceeds the value of his share of the capital of such business or company at the time when such share was acquired by him; | | |
| | (f) the amalgamation or merger of two or more companies, means, where such person was a shareholder of any of those companies, any money received by such shareholder in consequence of such amalgamation or merger, and where such person was not a shareholder of any of those companies, the value of the consideration received by him for any trans action in connection with such amalgamation or merger ; and | | |
| | (g) the promotion of a transaction to which such person was not a party, means the commission or reward received by him in connection with such promotion. | | |
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| (3) " Value ", with reference to any property or consideration in the context of the definition of " capital gain " and in relation to any person to whom the capital gain arises, shall be as follows : -
| | (a) where the property was acquired before April 1, 1957, by the person to whom such gain arises then, subject to the provisions of paragraph (c), paragraph (d), paragraph (e), paragraph (f), paragraph (g) and paragraph (h), the value of the property at the time when it was acquired by such person shall be an amount equal to the market value of the Property on April 1, 1957 ; | | |
| | (b) where the property was acquired on or after April 1, 1957, by the person to whom such gain arises then, subject to the provisions of paragraph (c), para graph (d), paragraph (e), paragraph (f), para graph (g) and paragraph (h), the value of the property at the time it was acquired by such person shall-
| | | (i) if such acquisition was by purchase, be an amount equal to the cost of such purchase; and |
| (ii) if such acquisition was otherwise than by purchase, be an amount equal to the market value of the property at the time of such acquisition ; |
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| | (c) where the property was acquired by the person to whom such gain arises in his capacity as a beneficiary under a trust or the testate or intestate heir of the deceased, in consequence of a transfer by the trustee of such trust or by the executor appointed to administer the estate of such deceased, the value of the property at the time of such acquisition shall-
| | | (i) if the date of the acquisition of such property by such trustee or executor is before April 1,. 1957, be an amount equal to the market value of the property on April 1, 1957 ; and |
| (ii) if the date of the acquisition of such property by such trustee or executor is on or after April 1, 1957, be an amount equal to the market value of the property at the time when such trustee or executor came into possession of the property ; |
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| | (d) where the person to whom the gain arises had come into possession of the property immediately after the cessation of a life interest of any other person in the property or after the cessation of the rights of a fiduciary in that property, the value of the property at the time when the first-mentioned person acquired such property shall-
| | | (i) if the date of the cessation of such life interest or such rights of a fiduciary is before April 1, 1957, be an amount equal to the market value of the property on April 1, 1957; and |
| (ii) if the date of the cessation of such life interest or such rights of a fiduciary is on or after April 1, 1957, be an amount equal to the market value of the property on such date; |
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| | (e) where the property is a bonus share issued on or after April 1, 1957, to the person to whom such gain arises, the value of the property at the time when it was acquired by such person shall be deemed to be nil; | | |
| | (f) where the property is a share issued on or after April 1, 1957, to the person to whom such gain arises at a price less than the market value of such share, the value of the property at the time when it was acquired by such person shall be an amount equal to the cost of acquisition of such property; | | |
| | (g) where the property consists of any shares received by the person to whom such gain arises in lieu of shares held by him in any of two or more companies which have amalgamated or merged on or after April 1, 1957, the value of the property at the time when it was so received shall-
| | | (i) if the last-mentioned shares were acquired by him before April 1, 1957, be an amount equal to the market value of the last mentioned shares on April 1, 1957 ; or |
| (ii) if the last-mentioned shares were acquired by him on or after April 1, 1957, be an amount equal to the cost of purchase of such shares as were acquired by purchase and the market value on the date of acquisition of such shares as were acquired by him otherwise than by purchase ; |
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| | (h) where the property consists of shares in respect of which there has been a return or distribution of capital the value of the property at the time when such shares were acquired shall-
| | | (i) if such shares were acquired by the person to whom such gain arises before April 1, 1957, be an amount equal to the market value of the shares on April 1, 1957, less the amount of the capital returned, or distributed on or after that date, if the amount of the capital returned or distributed is not a dividend within the meaning of this Act; and |
| (ii) if such shares were acquired by the person to whom such gain arises on or after April 1, 1957, be an amount equal to the cost of purchase of such shares as were acquired by purchase and the market value on the date of acquisition of such shares as were acquired by him otherwise than by purchase, less the amount of the capital returned or distributed if the amount of the capital returned or distributed is not a dividend within the meaning of this Act; |
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| | (i) the value of the property at the time of the occurrence of the transaction which resulted in such gain shall-
| | | (i) if such transaction is a sale of the property, be an amount equal to the sale price of such property ; |
| (ii) if such transaction is other than a sale, be an amount equal to the market value of such property at the time of the occurrence of the transaction; |
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| | (j) the value of any consideration received by the person to whom such gain arises shall-
| | | (i) Where the consideration is partly cash and partly property other than cash be an amount equal to the aggregate of such cash and the market value of such property on the date on which the consideration was received ; and |
| (ii) where the consideration is wholly property other than cash be an amount equal to the market value of such property on the date on which the consideration was received ; and |
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| | (k) where, in the case of a change of ownership of the property of any person occurring by sale, the Assessor is of the opinion that the sale price is less than the market value of that property at the time of the sale, then unless that person satisfies the Assessor that there was reasonable cause for the difference between the sale price and such market value, the value of such property at the time of the sale shall be an amount equal to the market value of that property at that time. | | |
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| (4) For the purposes of subsection (2), the amount of a capital gain shall be computed after making the following deductions : -
| | (a) any expenditure (other than the purchase price if any) incurred on or after April 1, 1957, solely in connection with the acquisition of the property by the person who is the owner of that property immediately before the occurrence of the transaction which resulted in such gain; | | |
| | (b) any expenditure incurred on or after April 1, 1957, by such owner in making any improvements, additions or alterations to that property if no deduction in respect of such expenditure is or has been allowed under section 23 of this Act, or under section 10 or section 53 or section 53A or section 53B of the Inland Revenue Act, No. 4 of 1963, or under section 11 or section 32 of the Income Tax Ordinance ; | | |
| | (c) any expenditure incurred by such owner solely in connection with the transaction which resulted in such gain ; and | | |
| | (d) in the case of a change of ownership of any property-
| | | (1) where the change of ownership occurs not less than five years but not exceeding fifteen years after the acquisition of that property by the person to whom the capital gain arises, a sum equal to twenty-five per centum ; and |
| (2) where the change of ownership occurs over fifteen years after the acquisition of that property by the person to whom the capital gain arises, a sum equal to fifty per centum, |
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Sri Lanka Consolidated Acts