40. For the purposes of this Chapter-
| (a) where a company makes a gift on any date, every person who is a shareholder of the company on that date shall be deemed to make a gift in value equal to an amount which bears to the value of the gift made by the company the same proportion as his share of the capital of the company bears to the aggregate of the shares of the capital of the company, and, if any such shareholder has not consented to the making of the gift by the company and declines to pay such part of the gifts tax in respect of his taxable gifts as is attributable to the value of the gift which he is deemed to make under this paragraph, the provisions of subsection (4) of section 39 shall apply in regard to the recovery of the amount which he declines to pay as though such amount were a contribution which cannot be recovered from him; |
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| (b) where any property is transferred and an Assessor, having regard to the circumstances of the case, is of the opinion that the transfer is for a consideration which is not adequate, and the parties to the transfer, upon being requested in writing by the Assessor to show cause against such opinion within the time specified in the request, do not show cause within that time or show such cause as is considered by the Assessor to be inadequate, the amount by which the market value of that property at the date of the transfer exceeds the value of the consideration shall be deemed to be a gift made by the transferor; |
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| (c) where any property is transferred and an Assessor, having regard to the circumstances of the case, is of the opinion that the consideration for the transfer has not passed or is not intended to pass either in full or in part from the transferee to the transferor, and the parties to the transfer, upon being requested in writing by the Assessor to show cause against such opinion within the time specified in the request, do not show cause within that time or show such cause as is considered by the Assessor to be inadequate, the amount of the consideration which, in the opinion of the Assessor, has not passed or is not intended to pass shall be deemed to be a gift made by the transferor; |
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| (d) where a person absolutely entitled to any property causes or has caused that property to be vested in whatever manner in himself and any other person jointly without adequate consideration and such other person makes an appropriation from or out of that property, the amount of the appropriation used for the benefit of the person making the appropriation or for the benefit of any other person shall be deemed to be a gift made in his favour by the person who causes or has caused that property to be so vested; |
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| (e) where there is a release, discharge, surrender or abandonment of any debt (other than a debt which is treated as a bad debt and allowed as a deduction for the purposes of income tax under this Act) or contract or of any interest in any property by any person, the value of the release, discharge, surrender or abandonment shall be deemed to be a gift made by him; and |
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| (f) the gift of any property on or after July 18, 1958, subject to a reservation in favour of the donor or any other person shall be deemed to take effect when it is made and not when the interest created by the reservation is extinguished. |
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Sri Lanka Consolidated Acts