Inland Revenue Act (No. 38 of 2000)

Sri Lanka Consolidated Acts

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Inland Revenue Act (No. 38 of 2000) - 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 such person 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 such part, if any. of such loss as consists of a capital loss, a loss referred to in subsection (6). a loss referred to in subsection (7), a loss referred to in subsection (8). a loss referred to in paragraph (c) and a loss attributable to any allowance for depreciation or any sum referred to in paragraph (e) of subsection (1) of section (23). incurred by him in any trade, business, profession or vocation during any year of assessment being any year of assessment within the period of six years immediately preceding the first-mentioned year of assessment, or

	(c) the amount of a loss (other than such part, if any. of such loss as is attributable to any allowance for depreciation or any sum referred to in paragraph (c) of subsection (1) of section 23) incurred by him in any agricultural undertaking during any year of assessment being any year of assessment within the period of eleven years immediately preceding the first-mentioned year of assessment.

	(d) such part, if any. of such loss as is attributable to any allowance for depreciation, incurred by him in any trade, business, profession or vocation during any year of assessment and which has not been allowed against his total statutory income of a previous year of assessment ;

(3)

(a) Where the profits and income of an undertaking were exempt from income tax, under section 17 or section 18 or section 19 or section 20 of this Act. or under section 16c or section 17A or section 17C or section 17D or section 17G; or section 17H or section or section 17J or section 17JJ or section 22A. or section 22B. or section 22C or section 22D or section 22DD or section 22DDD or section 22DDDD of the inland Revenue Act. No. 28 of 1979 or under section 6 of the Inland Revenue Act. No. 4 of 1963. for any period (such period being referred to in this paragraph as the exempt period). there shall be deducted from the total statutory income of the person who carries on that undertaking in the 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 the year of assessment referred to in paragraph (a), the residue, if any. of such entirety or of such portion, after, its deduction from the total statutory income of such person for that year of assessment, shall be deemed to be a loss incurred by such person in that undertaking in the year of assessment immediately succeeding that year of assessment and may accordingly be deducted in the manner provided in paragraph (b)(c) or (d) of subsection (2).

(4) 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 (6). incurred by him in that trade, business, profession or vocation in any year of the 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 142 be revised :

(5)

	(a) There shall be deducted from the total statutory income or 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 toss 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 ownership 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 : and

(iv) includes the amount of any debt (other than a trade debt) which is proved to be due by documentary evidence and which is proved to be irrecoverable.

	(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 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 an)1 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 subparagraph (i) the tax for that year of assessment in respect of him shall, notwithstanding am thing in section 142. 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.

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

(iv) Where a deduction is made from the statutory income of any company for any year of assessment under subparagraph (iii), the tax for that year of assessment in respect of such company shall, notwithstanding the provisions of section 142. be revised, taking into consideration such deduction, and the difference between the amount of the tax paid by such company in respect of that year of assessment and the amount of the revised tax for that year of assessment shall be refunded.

	(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" and "gain" occurring in that subsection, there were substituted the expressions "capital loss" and "loss".

(6) 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 of 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 :

(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 of any foreign currency banking unit arising from on-shore foreign currency transactions and which are not exempt from income tax under this Act. any loss for any year of assessment incurred by such person from such foreign currency banking unit from on-shore foreign currency transactions 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) 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 any business of leasing, any loss incurred in any year of assessment from the business of leasing 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:

(9) 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.

(10) 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.

(11) Where the total statutory income of any child for any year of assessment is aggregated with, and deemed to be a pan 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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