Inland Revenue Act (No. 4 of 1963)

Sri Lanka Consolidated Acts

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Inland Revenue Act (No. 4 of 1963) - Sect 10

Deductions allowed

10.*

(1) Subject to the provisions of subsections (7) and (8), 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-[* The amendments made in section 10 by subsection (1) of section 6 of Act No. 18 of 1985, other than the amendments, made in the aforesaid section 10 by sub-paragraph (iv) of paragraph (A), and by paragraph (C), of subsection (1) of section 6 of Act No. 18 of 1965, shall be deemed to have come into force on March 30, 1963,-[See section 6 (2) of Act No. 18 of 1965].]

(a) such sum as the Commissioner in his discretion considers reasonable for the depreciation by * The amendments made in section 10 by subsection (1) of section 6 of Act No. 18 of 1985, other than the amendments, made in the aforesaid section 10 by sub-paragraph (iv) of paragraph (A), and by paragraph (C), of subsection (1) of section 6 of Act No. 18 of 1965, shall be deemed to have come into force on March 30, 1963,-[See section 6 (2) of Act No. 18 of 1965]. wear and tear of plant, machinery, and fixtures arising out of their use by such person as the owner thereof in a trade, business, profession, vocation, or employment carried on or exercised by him, such sum being calculated normally at a fixed rate per centum per annum on the written-down value;

(b) where such person who carries on or exercises any trade, business, profession, vocation, or employment has sold or discarded any plant, machinery, or fixtures used in producing the income therefrom, without ceasing to carry on or exercise the said trade, business, profession, vocation, or employment, the loss attributable to the excess of the written-down value over the sum, if any, realized or likely to be realized by the sale thereof;

(2) The provisions of paragraphs (a) and (b) of subsection (1) shall not apply to any plant, machinery or fixtures purchased after March 31, 1957, or where statutory income is directed by the Commissioner under section 12 (2) to be computed up to any such day other than the thirty-first day of March as is specified in the direction, after such specified day in the year preceding the year of assessment commencing on April 1, 1957.

(3) Where any person sells, discards, otherwise disposes of, or otherwise ceases to be the owner of, any plant, machinery or fixtures acquired by him after March 31, 1957, or such specified day as is referred to in subsection (2), and used in producing the income from any trade, business, profession, vocation, or employment carried on or exercised by him, or any building constructed after March 31, 1957, or such specified day as is referred to in subsection (2), which is a staff welfare building or a building for use as a dwelling house by any member of the subordinate staff employed by him in or for the purposes of, or in connection with, any agricultural or industrial undertaking, or which is a building occupied, for the purposes of such undertaking, otherwise than as a dwelling house, and the sale or discard or other disposal or other cessation of ownership occurs when or after he ceases to carry on or exercise such trade, business, profession, vocation, employment or undertaking, and a deduction for depreciation has been made under paragraph (h), or paragraph (i) of subsection (1) in respect of the things sold or discarded or otherwise disposed of or otherwise ceased to be owned, then, if the sale or discard or other disposal or other cessation of ownership is before the expiry of the period of likely use by reference to which the deduction for depreciation was determined, such part of the amount deducted for depreciation as is in the opinion of the Commissioner attributable to the unexpired part of such period shall be added to the profits or income of such person as a receipt of such trade, business, profession, vocation, employment or undertaking.

(4) Where any person sells, discards, otherwise disposes of, or otherwise ceases to be the owner of, any plant, machinery or fixtures acquired by him after March 31, 1957, or such specified day as is referred to in subsection (2), and used in producing the income from any trade, business, profession, vocation, or employment carried on or exercised by him, or any building constructed after March 31, 1957, or such specified day as is referred to in subsection (2), which is a staff welfare building or a building for use as a dwelling house by any member of the subordinate staff employed by him in or for the purposes of, or in connection with, any agricultural or industrial undertaking, or which is a building occupied for the purposes of such undertaking, otherwise than as a dwelling house, and the sale or discard or other disposal or other cessation of ownership occurs without his ceasing to carry on or exercise such trade, business, profession, vocation, employment or undertaking, and a deduction for depreciation has been made under paragraph (h) or paragraph (i) of subsection (1) in respect of the thing sold or discarded or otherwise disposed of, or otherwise ceased to be owned, then-

(a) if the sale or discard or other disposal or other cessation of ownership is before the expiry of the period of likely use by reference to which the deduction for depreciation was determined, the Commissioner shall take into account the unexpired part of such period and determine the amount of the loss, or the amount of the profit, arising in the event of a sale from the sale, or in the event of a discard or other disposal or other cessation of ownership, from the likely sale of such plant, machinery, fixtures or building, and where the amount of the loss is so determined, there shall be deducted that amount for the purpose specified in subsection (1), and where the amount of the profit is so determined, that amount shall be added to the profits or income of such person as a receipt of such trade, business, profession, vocation, employment, or undertaking, and where such plant, machinery, or fixtures was or were only partly used or employed for such trade, business, profession, vocation, or employment, or such building was only partly used for the purposes of, or in connection with, such undertaking, the deduction or addition under this subsection shall be proportionately reduced; and

(b) if the sale or discard or other disposal or other cessation of ownership is after the expiry of the aforesaid period of likely use, the full amount of the sale proceeds in the event of a sale, or the full amount likely to be realized by the sale of such plant, machinery, fixtures, or building in the event of a discard or other disposal or other cessation of ownership shall be added to the profits or income of such person as a receipt of such trade, business, profession, vocation, employment, or undertaking, and where in the case of a discard or other disposal or other cessation of ownership such plant, machinery or fixtures was or were only partly used or employed for such trade, business, profession, vocation, or employment, or such building was only partly used for the purposes of, or in connection with, such undertaking, the addition under this sub-section shall be proportionately reduced.

(5) There shall be deducted for the purpose of ascertaining the profits and income of any person- For the purposes of this subsection " approved project" means-

	(a) a sum equal to twenty per centum of the expenditure actually incurred by him in the purchase and installation of any new plant, machinery, or fixtures to be used by him in the commencement by him of a trade or business (other than an agricultural undertaking) which is not an approved project;

	(b) a sum equal to forty per centum of the expenditure actually incurred by him in the purchase and installation of any new plant, machinery or fixtures to be used by him in an agricultural undertaking or in the commencement by him of a trade or business which is an approved project;

(c) a sum equal to twenty per centum of the expenditure actually incurred by constructing or renewing any building, for the purposes of any industrial undertaking other than an approved project, to be used as a staff welfare building or as a dwelling house by any member of the subordinate staff employed by him in, or for the purposes of, or in connection with, such undertaking, or as a building to be occupied for the purposes of such undertaking other than as a dwelling house;

(d) a sum equal to forty per centum of the expenditure actually incurred in constructing or renewing any building, for the purposes of any approved project or agricultural undertaking, to be used as a staff welfare building, or as a dwelling house by any member of the subordinate staff employed by him in, or for the purposes of, or in connection with, such project or undertaking, or as a building to be occupied for the purposes of such project or undertaking other than as a dwelling house:

	(i) any project declared by the Minister to be an approved project for the purposes of section 47a of the Income Tax Ordinance, or

	(ii) any such project for the establishment of a new undertaking as is considered by the Minister for the time being in charge of the subject of industries to be essential for the economic progress of Ceylon and is, at the request of such Minister, declared by the Minister of Finance to be an approved project for the purposes of this subsection and published in the Gazette.

(6) Where in respect of a year preceding a year of assessment, any person who is not a citizen of Ceylon, and who is carrying on or exercising any trade, business, profession or vocation in Ceylon incurs any cost of passage from Ceylon to his home abroad and from such home to Ceylon of himself or of his wife, son or daughter, the amount of such cost shall be deducted for the purpose specified in subsection (1).

(7) In ascertaining the profits or income arising from the rent or annual value of land and improvements thereon, no deduction shall be made for outgoings and expenses except those authorized in section 3.

(7A) For the purposes of paragraph (k) of sub-section (1), where the actual expenses incurred by any person in respect of a vehicle used by him partly for the purposes of his trade, business, profession or vocation and partly for his domestic or private purposes cannot be ascertained, such sum as the Assessor considers to be the amount of the expenses so incurred shall be deemed to be the actual expenses so incurred by such person in respect of that vehicle.

(8) Subject as hereinafter provided, income arising from interest shall be the full amount of interest falling due whether paid or not, without any deduction for outgoings or expenses:

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