23.
| (1) Subject to the provisions of subsections (2) and (4). there shall be deducted for the purpose of ascertaining the profits or income of any person from any source, all outgoings and expenses incurred by such person in the production thereof, including"
| | (a) an allowance equal to the sum expended by such person in the purchase of any implement or equipment for any undertaking of deep-sea or off shore fishing carried on by such person ; | | |
| | (b) an allowance for depreciation by wear and tear of"
| | | (i) any plant, machinery or fixtures (other than plant, machinery or fixtures referred to in sub-paragraph (ii) or sub-paragraph (iii)), acquired by such person and arising out of their use. in any trade, business, profession or vocation, carried on. or exercised, by such person at the rate of fifty per centum per annum, on its cost of acquisition ; |
| (ii) any motor vehicle, lorry, bus, tractor or trailer (other than any motor coach referred to in sub-paragraph (iii)), or any office furniture acquired by such person and arising out of its use. in any trade, business, profession or vocation carried on or exercised, by him, at the rate of twenty-five per centum per annum on its cost of acquisition ; |
| (iii) any motor coach acquired by such person and used for transporting employees of such person to. or from, their place of work, at the rate of one hundred per centum on its cost of acquisition : |
| (iv) any qualified building constructed by such person and arising out of its use in any trade. business. profession or vocation earned on or exercised by him. at the rate of six and two third per centum per annum on its cost of construction : |
| (v) any unit of non-residential accommodation comprised in a registered Condominium Property within the meaning of the Apartment Ownership Law No, 11 of 1973. acquired by such person and arising out of its, use in am trade, business, profession or vocation carried on or exercised by him. at the rate of six and two third per centum per annum on its cost of acquisition : |
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| | (c) a sum equal to one-tenth of any payment made. by such person as consideration for the licensing, in his favour, of any manufacturing process used by him in any trade or business carried on by him : | | |
| | (d) an allowance in respect of any computer software acquired by him during the period of which the profits and income are being ascertained and used by him in any trade, business, profession, or vocation carried on or exercised by him, such allowance being an amount equal, to fifty per centum of the cost of acquisition of such computer software : | | |
| | (e) any sum expended by such person for the renewal of any capital asset employed by such person for producing such profits or income, if no allowance for the depreciation thereof is deductible in respect of that asset ; | | |
| | (f) any sum expended by such person for the repair (not renewal) of any plant, machinery, fixtures, building, implement, utensil or article employed for producing such profits and income : | | |
| | (g) a sum equal to the bad debts incurred by such person in any trade, business, profession, vocation or employment which have become bad debts during the period for which the profits are being ascertained and such sum as the Commissioner-General considers reasonable for doubtful debts to the extent that they are estimated to have become bad during that period, notwithstanding that such bad or doubtful debts were due and payable prior to the commencement of that period : | | |
| | (h) interest paid or payable by such person ; | | |
| | (i) any contribution by an employer, to a pension. provident or savings fund, or to a provident or savings society, which is approved by the Commissioner-General subject to such conditions as he may specify ; | | |
| | (j)
| | | (i) any turnover tax payable under the Turnover Tax Act. No. 69 of 1981 less any deduction allowable under section 47 or section 48 or section 48A of that Act : or |
| (ii) tax corresponding to turnover tax referred to in sub-paragraph (i) and payable, under any statute enacted by any Provincial Council. |
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| | (k) the expenditure incurred by such person in carrying on any scientific, industrial or agricultural research for the development of the trade or business carried on by such person : | | |
| | (l) any expenses incurred by such person in"
| | | (i) opening up any land for cultivation or for animal husbandry : or |
| (ii) cultivating such land with plants of whatever description : or |
| (iii) the purchase of livestock or poultry to be reared on such land : or |
| (iv) the construction of tanks or ponds or the clearing or preparation of any inland waters for the rearing of fish and the purchase of fish to be reared in such tank, pond or inland waters, as the case may be ; |
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| | (m) the actual expenses incurred by such person or any other person in his employ in traveling within Sri Lanka in connection with the trade, business profession or vocation of the first-mentioned person : | | |
| | (n) in the case of a company, expenditure incurred in the formation or of that company ; | | |
| | (o) the expenditure incurred by such person in operating a motor coach used for transporting employees of such person to and from their place of work ; | | |
| | (p) the expenditure incurred by such person in the payment of gratuity to an employee on the termination of employment of such employee due to cessation of the trade, business, profession or vocation carried on by such person : | | |
| | (q) any annual payment made by such person to any fund, approved for the purposes of this paragraph, by the Commissioner-General and maintained for the purposes of payment, under the Payment of Gratuity Act, No. 12 of 1983. of gratuities to employees on the termination of their services : | | |
| | (r) such part of the lump sum payment made by such person to any other person in connection with the letting, or lease, to the first-mentioned person of any commercial premises as bears to the total lump sum payment the same proportion as the number of months in the year for which lease rent is payable bears to the total number of months comprised in the lease ; | | |
| | (s) any sum paid, by a public corporation or Government Owned Business Undertaking as a special levy, to the Government. | | |
| | (t) expenditure incurred by any person in the training, in any recognized institution for a period not exceeding sixty days, of any employee employed by such person in any trade or business carried on by such person, if it is proved to the satisfaction of the Commissioner-General that such training is"
| | | (i) directly relevant to the duties performed by such employee before the commencement of such training : |
| (ii) essential for upgrading the skills or performance of such employee, in such trade or business ; and |
| (iii) necessary for improving the efficiency and performance of such trade or business. |
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| (2) Where any person is entitled to a deduction in respect of any outgoing or expense under two or more paragraphs of subsection (1). in ascertaining the profits and income of such person from any source such person shall be allowed a deduction only under one such paragraph. |
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| (3) Where any person disposes of any capital asset used by him in producing the profits and income of any trade, business, profession or vocation earned on, or exercised, by him and
| | (a) an allowance for depreciation equal to the cost of acquisition or the cost of construction, as the case may be. of such capital asset has been granted in respect of that capital asset, such part of the proceeds of disposal as is not in excess of the cost of acquisition or the cost of construction, as the case may be. of such capital asset shall, whether such disposal takes place while such trade, business, profession or vocation continues or after its cessation. be treated as a receipt of such trade, business. profession or vocation, in ascertaining the profits and income, within the meaning of paragraph (a) of" section 3. of such trade, business, profession or vocation ; | | |
| | (b) an allowance for depreciation has been granted in respect of that capital asset but the total amount of such allowance is less than the cost of acquisition or the cost of construction, as the case may be. of such capita] asset the proceeds of disposal as is not in excess of the cost of acquisition or the cost of construction as the case may be of such capital asset over the difference between the cost of acquisition or the cost of construction, as the case may he. of such capital asset and the total allowance for depreciation granted in respect of such capital asset shall whether such disposal takes place while such trade, business, profession or vocation continues or after its cessation, be treated as a receipt of such trade. business, profession or vocation, in ascertaining the profits and income of such trade business, profession or vocation within the meaning of paragraph (a) of section 3 ; | | |
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| (4) Subject as hereinafter provided, income arising from interest shall be the full amount of interest falling due whether received or not. without any deduction for outgoing or expenses : |
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| (5) No deduction under paragraph (a), or paragraph (b), or paragraph (c) or paragraph (d). or paragraph (e). or paragraph (f), or paragraph (g), or paragraph (h) of subsection (1) in respect of any capital asset shall be allowed to any person if"
| | (a) such person has let on hire such capital asset"
| | | (i) to any undertaking the whole or any pant, of the profits and income within the meaning of paragraph (a) of section 3. of which are exempt from income tax ; or |
| (ii) for the use in any undertaking carried on by the person from whom it was acquired or by any member of the family of that person or any member of his family in partnership with any other person or persons ; or |
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| | (b) such person uses such capital asset in any undertaking carried on by him in partnership with the person from whom it was acquired or with any member of the family of the person from whom it was acquired : | | |
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| (6) The profits and income received by one spouse for services rendered in am trade, business, profession or vocation earned on or exercised"
| | (a) by the other spouse ; or | | |
| | (b) by a partnership of which that other spouse is a partner shall be deemed to be the profits and income of that other spouse. | | |
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| (7) For the purposes of this section-
| | (a) "allowance for depreciation", in relation to any capital asset, means any allowance which shall be deducted in respect of that asset under"
| | | (i) paragraph (a), paragraph (b) or paragraph (d) of subsection (1) of this section. |
| (ii) paragraph (a) or paragraph (b) or paragraph (c) or paragraph (d) or paragraph (e) or paragraph (ee) or paragraph (eee) or paragraph (eeeee) of subsection (1) of section 23 of Act. No. 28 of 1979 ; |
| (iii) paragraph (a) or paragraph (h) or paragraph (i) or paragraph (1) or paragraph (m) or paragraph (n) or paragraph (o) or paragraph (p) of subsection (1) of section 10 of the Inland Revenue Act. No. 4 of 1963 ; or |
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| | (b) "capital asset'' in relation to a trade, business, profession or vocation means plant, machinery, fixture, fittings, utensils, articles or equipment used for the purpose of producing the income in such trade business, profession or vocation or building constructed for the purposes of such trade, business, profession or vocation : | | |
| | (c) "proceeds" in relation to the disposal of any capital asset means"
| | | (i) the sale price of such asset, where the disposal is by sale ; or |
| (ii) the market value of such asset at the time of disposal, where the disposal is otherwise than by sale. |
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Sri Lanka Consolidated Acts