195. Interpretation

an accountant who is a member of the Institute of Chartered Accountants of Sri Lanka; or

an accountant who is a fellow member of the

an action, agreement, course of conduct, dealing, promise, transaction, understanding or undertaking, whether express or implied, whether or not enforceable by legal proceedings and whether unilateral or involving more than one person; or

a part of an item described in paragraph (a);

in any case-

a member of the Institute of Chartered

an attorney-at-law;

an employee regularly employed by that person; or

a member of the Sri Lankan Institute of

an individual approved by the

an individual specified by the

in the case of an individual, a relative;

in the case of a company, a director or the secretary of that company;

in the case of a partnership, a partner of that partnership;

in the case of a body of persons, a member of such body;

includes-

a trade, profession, vocation or isolated arrangement with a business character however short the duration of the arrangement; and

a past, present or prospective business;

excludes an employment;

means each of the following assets:-

land or buildings;

a membership interest in a company, partnership or trust;

a security or other financial asset;

an option, right or other interest in an asset referred to in the foregoing paragraphs; but

excludes trading stock or a depreciable asset;

the relief of poverty;

the advancement of education or knowledge other than by any institution established for business purposes or by any institution established under the Companies Act;

activities for the protection of the environment or eco-friendly activities;

the advancement of religion or the maintenance of religious rites and practices or the administration of a place of public worship;

any other purpose beneficial to the community, not falling within any of the above categories;

means a corporation, unincorporated association or other body of persons;

includes –

a friendly society, building society, pension fund, provident fund, retirement fund, superannuation fund or similar fund or society; and

a government excluding the Sri Lankan government, a political sub-division of a government, or a public international organization; but

excludes a partnership or trust; and

the following shall be deemed to be a company:-

a partnership in which at least twenty of the partners have limited liability for the debts of the partnership; and

a unit trust or mutual fund to which section 59 applies;

means an asset to the extent to which it is employed in the production of income from a business and which is likely to lose value because of wear and tear, obsolescence or the passing of time; but

excludes goodwill, an interest in land, a membership interest in an entity and trading stock;

means a payment derived by a member from a company, whether received as a division of profits, in the course of a liquidation or reconstruction, in a reduction of capital or share buy-back or otherwise;

includes a capitalisation of profits –

whether by way of a bonus share issue, increase in the amount paid-up on shares or otherwise; and

whether an amount is distributed or not;

excludes a payment to the extent to which it is –

matched by a payment made by the member to the company;

debited to a capital, share premium or similar account; or

otherwise constitutes a final withholding payment or is included in calculating the income of the member;

an asset owned by a resident person (other than foreign land or buildings or an asset held by a foreign permanent establishment of the person)

an interest in land or a building situated in Sri

shares in a resident company;

a membership interest in a body, if more than fifty per cent of the value of the interest is derived, directly or indirectly through one or more interposed bodies, from land or buildings in Sri Lanka;

capital assets;

financial instruments; or

other similar assets;

means –

a position of an individual in the employment of another person;

a position of an individual as manager of an entity;

a position of an individual entitling the individual to a fixed or ascertainable remuneration in respect of services performed;

a public office held by an individual;

a position of an individual to whom any payment is made or due by or from an employer or who receives any other benefit as an employee or in a similar capacity;

a position as a corporation or company director; and

includes a past, present or prospective employment;

any company or body of persons carrying on banking business and includes a licenced specialized bank, within the meaning of the

a non-banking financial institution regulated in the same way as a bank in paragraph (a); or

any other category of person as may be prescribed;

those adopted, from time to time, by the

the International Financial Reporting

a payment, including a discount or premium, made under a debt obligation that is not a repayment of capital; and

a swap or other payment functionally equivalent to interest;

a commitment, guarantee or service fee paid in respect of a debt obligation or swap agreement;

a distribution by a building society;

the owning of one or more assets, including one or more assets of a similar nature or that are used in an integrated fashion, and

includes a past, present or prospective investment; but

excludes a business or employment; or

a game of chance, including lotteries, betting or gambling;

means a capital asset held as part of an investment, but-

excludes the principal place of residence of an individual, provided it has been owned by the individual continuously for the three years before disposal and lived in for at least two of those three years (calculated on a daily basis);

a lease of land or buildings;

a lease of a structural improvement to land or buildings; or

an exploration, prospecting, development, or similar right relating to land or buildings; and

information relating to a right referred to in paragraph (c);

means a councillor, director, manager, member, officer or other person who participates or may participate, whether alone or jointly with other persons, in making senior management decisions on behalf of the entity; and

includes–

a working partner of a partnership and a trustee of a trust;

a person treated as a manager of an entity by any law; and

a non-resident person with respect to a

in the case of a depreciable asset, its share of the written down value of the pool to which it belongs at that time (paragraph 4 of the Fourth

in the case of any other asset or a liability, the amount by which cumulative costs for the asset or liability exceed cumulative consideration received for the asset or liability to the time;

for the provision or relief and services of a humanitarian nature to the poor and destitute, the sick, orphans, widows, youth, children; or

generally for the provision of relief to the needy, unless such organization or association is determined by the Commissioner-General not to be a non-governmental organization, but in all cases does not include an approved charity;

the transfer by one person of an asset or money to another person or the transfer by another person of a liability to the one person;

the creation by one person of an asset that on creation is owned by another person or the decrease by one person of a liability owed by another person;

the provision by one person of services to another person; and

the making available of an asset or money owned by one person for use by another person or the granting of use of such an asset or money to another person;

is first named in the agreement of partnership;

if there is no such agreement, is specified by name or initials singly or with precedence to the other partners, in the usual name of the partnership; or

is the first name in the statement made under section 4 of the Business Names Act, No.7 of 1987;

applied on behalf of the person either at the instruction of the person or under any law;

reinvested, accumulated or capitalised for the benefit of the person;

credited to an account, or carried to any reserve, or a sinking or insurance fund for the benefit of the person; or

made available to the person;

means a payment, including a payment of a premium or like amount, for the use of or right to use property of any kind;

includes a payment for the rendering of, or the undertaking to render, assistance ancillary to a use or a right referred to in paragraph (a); but

excludes a natural resource payment or a royalty;

the use of or right to use a copyright of literary, artistic or scientific work, including cinematograph films, software or video or audio recordings, whether the work is in electronic format or otherwise;

the use of or right to use a patent, trade mark, design or model, plan, or secret formula or process;

the use of or right to use any industrial, commercial, or scientific equipment;

the use of or right to use information concerning industrial, commercial or scientific experience;

the rendering of or the undertaking to render assistance ancillary to a matter referred to in paragraph (a), (b), (c) or (d); or

a total or partial forbearance with respect to a matter referred to in paragraph (a), (b), (c), (d)

a citizen of Sri Lanka during the year of assessment;

resident in Sri Lanka for the year of assessment;

who is sixty years old or above at any time during the year of assessment;

the person who conducts business solely in Sri

the person does not have an associate that is an entity; and

the person’s annual gross turnover is less than

entrepot trade involving import, minor processing and re-export;

offshore business where goods can be procured from one country or manufactured in one country and shipped to another country without bringing the same into Sri Lanka;

providing front end services to clients abroad;

headquarters operations of leading buyers for management of financial supply chain and billing operations;

logistic services such as bonded warehouse or multi-country consolidation in Sri Lanka;

transshipment operations;

freight forwarding;

supply of services to any exporter of goods or services or to any foreign principal of such exporter directly, being services which could be treated as essentially related to the manufacture of such goods or provision of such services exported by such exporter either directly or through any export trading house, including any service provided by an agent of a ship operator to such agent’s foreign principal, and the payment for such services are made by such exporter or foreign principal to such person in Sri Lanka in foreign currency;

production or manufacture, and supply to an exporter of non-traditional goods; and

the performance of any service of ship repair, ship breaking repair and refurbishment of marine cargo containers, provision of computer software, computer programmes, computer systems or recording computer data, or such other services as may be specified by the

sale for foreign currency, of any gem or jewellery, being a sale made in Sri Lanka by any person authorized by the Central Bank of

a place in Sri Lanka where a person has, or is using or is installing substantial equipment or substantial machinery;

a place in Sri Lanka where a person is engaged in a construction, assembly or installation project for ninety days or more, including a place where a person is conducting supervisory activities in relation to such a project;

the provision of services in Sri Lanka, but only if activities of that nature continues (for the same or a connected project) for a period of one hundred and eighty three days or more in any twelve month period; and

a place in Sri Lanka where an agent performs any function on behalf of the business of a non-resident person –

including, in the case of an insurance business, the collection of premiums or the insurance of risks situated in Sri

excluding a case involving a general agent of independent status acting in the ordinary course of business as such;

the Commissioner-General; and

Deputy Commissioners General, Senior

a person who is required to pay tax under this

a person who is required to withhold tax and pay it to the Department;

the assets are held alone or jointly with other individuals or bodies corporate; or

the individual or body corporate is appointed or constituted trustee by personal acts, by will, by order or declaration of a court or by operation of the law; and

includes –

an executor, administrator, tutor or curator;

a liquidator, receiver, trustee in bankruptcy or judicial manager;

a person having the administration or control of assets subject to a usufruct or other limited interest;

a person who manages the assets of an incapacitated individual; and

a person who manages assets under a private foundation or other similar arrangement;

in relation to an entity, means membership interests owned in the entity, directly or indirectly through one or more interposed entities, by individuals or by entities in which no person has a membership interest; or

in relation to an asset owned by an entity, is determined as though the asset is owned by the persons having underlying ownership of the entity in proportion to that ownership of the entity;