26. Deductions not allowed in ascertaining profits and income

domestic or private expenses, including the cost of travelling between the residence of such person and his place of business or employment;

expenses incurred in connection with his employment, other than the expenses referred to in paragraph (e) and paragraph (g) of subsection (l) of section 25;

any expenditure incurred in travelling outside Sri

promotion of the export trade of any article or goods; or

provisions of any services for payment in foreign currency;

any expenditure incurred in travelling outside Sri

entertainment expenses incurred by such person or his employee or on his behalf in connection with any trade, business, profession or vocation carried on or exercised by him;

entertainment allowances paid by such person to his executive officer ;

any disbursements or expenses of such person, not being money expended for the purpose of producing such profits or income;

any expenditure of a capital nature or any loss of capital incurred by such person;

the cost of any improvements effected by such person;

any sum recoverable under a contract of insurance or indemnity, if the amount received under such contract is not treated as a receipt from such trade, business, profession or vocation under section 89

rent of, or expenses in connection with, any premises or part of a premises not occupied or used for the purposes of producing such profits and income;

any amount paid or payable by such person by way of—

income tax, or super tax or surtax or any other tax of a similar character in any country with which an agreement made by the Government of Sri Lanka for the avoidance of double taxation is in force (other than the excess of any such income tax, or super tax or surtax or any other tax of a similar character over such maximum amount of the credit in respect of

Sri Lanka income tax; or

any prescribed tax or levy; and

any Economic Service Charge levied under

any Value Added Tax on Financial Services levied under Chapter IIIA of the Value Added

any Social Responsibility Levy levied under item IV of the First Schedule to the Finance

any annuity, ground rent, or royalty paid by such person;

any payment by such person to any pension, provident, savings, widows’ and orphans’ pension, or other society or fund, except such payments as are allowed under paragraph (g) of subsection (l) of section 25;

(i)

three fourths of the excess of any expenditure in relation to any employee whose profits from employment under paragraph (a) of subsection (1) of section 4 exceeds six hundred thousand rupees per year, incurred by such person in providing any place of residence to any employee of such person or to the spouse, child or parent of such employee over the rental value of such place of residence which is included in the profits from employment of such employee within the meaning of section 4.

such part of the rental paid by him under any finance leasing agreement entered into by him in respect of–

any motor vehicle, furniture, plant, machinery or equipment other than information technology equipment and calculating equipment including accessories and computer software and other computing or calculating machine referred to in paragraph (a) of subsection (l) of section 25, as is in excess of one-fifth of the total rental payable under such agreement; and

any information technology equipment and calculating equipment including accessories and computer software as referred to in paragraph (a) of subsection (l) of section 25, as is in excess of one-fourth of the total rental payable under such agreement;

any sum transferred to any reserve or provision (other than any annual payment referred to in paragraph (o) of subsection (1) of section 25, for the payment of any sum referred to in subsection (2) of section 35;

such part of any sum paid or payable by such person, not being any venture capital company, any unit trust or any mutual fund, as consideration for the management of any trade, business, profession or vocation carried on or exercised by him, as exceeds–

one million rupees or one per centum of the turnover of such trade, business, profession or vocation during the period for which profits and income are being ascertained, whichever is lower or;

such amount as may be determined by the

any expenditure or outgoing in relation to any asset provided by such person to any employee to be used in the residence of such employee;

any expenditure or outgoing in relation to any movable or immovable property given by such person to any employee at a price, less than market value at the time of giving such property ;

any expenditure or outgoing in relation to any loan, other advance or credit granted to any employee which is subsequently written off as a bad debt by such person ;

one half of such person’s cost of advertisement in connection with any trade, business, profession or vocation carried on or exercised by him other than the cost of advertisement outside Sri Lanka incurred solely in connection with the export trade of any article or goods or the provisions of any services for payment in foreign currency ;

any expenditure incurred in any trade or business carried on in Sri Lanka by any non resident company being expenditure in the nature of head office expenditure, incurred in any period by reference to the profits and income of which the statutory income from such trade or business is computed.

the excess, if any, of the aggregate amount of the interest payable for any year of assessment by any subsidiary company (hereinafter referred to as the first mentioned subsidiary company) of any holding company, in respect of any loan obtained from such holding company or any other subsidiary company or subsidiary companies (hereinafter referred to as the second mentioned subsidiary company or subsidiary companies), over such part of the interest so payable, as is attributable to such part of such loan, as is equal to thrice the aggregate of the issued share capital and reserves at the end of that year of assessment of the first mentioned subsidiary company, where such first mentioned subsidiary company is a manufacturer:

the expressions “subsidiary company” and

the first mentioned subsidiary company shall, in relation to any year of assessment, be deemed to be “a manufacturer”, if more than fifty per centum of the turnover for that year of assessment of such subsidiary company, is from the sale of products manufactured by such subsidiary company ;

“reserves” do not include reserves arising from the revaluation of any asset ; and

“turnover” in relation to any year of assessment of a subsidiary company, means the total amount receivable, whether actually received or not, from every sale made in that year of assessment, of products manufactured by such subsidiary company :—

any sum included in such total amount, being the proceeds from the disposal of any capital asset ;

the amount of any bad debt incurred during that year of assessment, being an amount which had been included in the relevant turnover of such company for that or any previous year of assessment ; and

any sum included in such total amount, being a sum which represents the value added tax ; and

for any year of assessment, in respect of any vehicle used for travelling for the purpose of his trade, business, profession or vocation, except in respect of–

a motor cycle or bicycle used for such purpose by an officer, who is not an executive officer, in the employment of such person; and

a motor coach used for transporting employees of such person to or from their place of work;

in respect of any plant, machinery, fixtures, equipment or articles provided for the use of any officer or employee of such person, in the place of residence of such officer or employee, or for any deduction for any rental or annual payment in respect of any such vehicle, plant, machinery, fixtures, equipment or articles as are referred to in paragraphs (a)