7.
| (1) "Capital gain" means the profits or income, not being profits or income within the meaning of paragraph (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 in lights in any property , | | |
| | (d) the redemption of any share, debenture to other obligation , | | |
| | (e) the formation of a company , | | |
| | (f) the dissolution of a business of 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 transaction 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 light or the transfer of some of the lights in any property means subject to the provisions of subsection (4) the value of the consideration for such surrender, relinquishment or transfer , | | |
| | (c) She redemption of any share debenture or other obligation means subject to the provisions of subsection (4) the value of all property received by him in consequence of such redemption less the value. of that which is redeemed at the tune 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 paragraph(h)or 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 subsection (4), the amount by which the value of all properly 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 transaction 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, 1977, 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 she market value of the property on April 1, 1977 , | | |
| | (b) where the properly was acquired on or after April 1, 1977, by the person to whom such gain arises then, .subject to the provisions of paragraph (c), paragraph (d), paragraph (e), paragraph (f), paragraph (g), paragraph (h), paragraph (l) and paragraph (m), the value of the property at the time it was acquired by such person shall if such acquisition was-
| | | (i) by purchase, be an amount equal to the cost of such purchase ; and |
| (ii) 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 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 if the date of the acquisition of such property by such trustee or executor is "
| | | (i) before April 1, 1977, be an amount equal to the market value, of the property on April 1, 1977 and |
| (ii) on or after April 1,1977, 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 tome into possession of the property immediately alter the cessation of a life interest of any other person in the property or after the cessation of the rights of fiduciary in that property the value of the property at the Mine when the first mentioned person acquired such property shall if the date of the. cessation of such life interest or such. rights of a fiduciary is"
| | | (i) before April 1,1977 be an amount equal to the market value of the property on April 1,1977 and |
| (ii) on or after April 1, 1977 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 1,1977 to the person to whom such gain arises, ok value of the property at the time when it was acquired by such person shall be deemed to be nill | | |
| | (f) where the. property is a share. issued on or after April 1,1977 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 whom such gain arises in lieu of shares held by him in any of two or more. companies which have amalgamated or merged or after April 1,1977 the value of the property at the time when it was so received shall if the last- mentioned shares were acquired by him -
| | | (i) before April 1,1977, be an amount equal to the market value of the last-mentioned shares on April |
| (ii)on or after April 1,1977 be an amount equal to the cost of purchase of such shares as acquired by purchase and the market value of on acquisition of such shares as were acquired' by him otherwise than by purchase |
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| | (h) where the properly 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 if such shares were acquired by the person to whom such gain arises"
| | | (i) before April 1, 1977, be an amount equal to the market value of the shares on April 1,1977, less the amount of the capital required or distributed or after that date if the amount of the capital resumed or distributed is not a dividend within the meaning of this Act, and |
| (ii) on or after April 1, 1977 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 sales as were acquired by him otherwise than by purchase less the amount of the capital returned of distributed to 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 if such transaction is "
| | | (i) a sale of the property, be an amount equal to the sale price of such properly ; |
| (ii) 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, where the consideration is-
| | | (i) 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 she date on which the consideration was received ; and |
| (ii) 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 ; |
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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 properly at the time of the sale, then unless such 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 ; | | |
| | (l) where, the property, is immovable property and that property was acquired by way of gift or inheritance, on or after April 1,1977 by the person to whom the capital gain arises from any person who had acquired such property prior to April 1,1977 the value of such property at the lime it was acquired by the first mentioned person shall be an amount equal to the market value of such property on April 1,1977 increased by the cost of any improvements additions or alterations to that property made by the second mentioned person after April 1, 1977 and | | |
| | (m) where the property its immovable property and that property was acquired by way of gift or inheritance on or after April 1,1977 by the person to whom such gain arises from any person who had acquired such property on or after April 1,1977 the value of such property at the time when it was acquired by the mentioned person shall if the second mentioned person had acquired that property. -
| | | (i) by purchase, be an amount equal to the cost of such purchase ; and |
| (ii) otherwise than by purchase, be an amount equal to the market value of the properly at the time of such acquisition. |
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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 (oilier than the purchase price if any) incurred on or after April 1, 1977, 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 after April 1, 1977, 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 23 or paragraph (1) of subsection (2) of section 31 of the Inland Revenue Act . No 28 of 1979. | | |
| | (c) any expenditure incurred by such owner solely in connection with the transaction which resulted in such gain. | | |
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Sri Lanka Consolidated Acts