23. Ascertainment of profits or income

an allowance equal to the sum expended by such person in the purchase of any implement or equipment for any undertaking of deep-sea or off-shore fishing carried on by such person ;

an allowance for depreciation by wear and tear of—

any plant, machinery or fixtures (other than plant, machinery or fixtures referred to in sub-paragraph (ii) or sub-paragraph (iii)), acquired by such person and arising out of their use, in any trade, business, profession or vocation, carried on, or exercised, by such person at the rate of fifty per centum per annum, on its cost of acquisition ;

any motor vehicle, lorry, bus, tractor or trailer

any motor coach acquired by such person and used for transporting employees of such person to, or from, their place of work, at the rate of one hundred per centum on its cost of acquisition ;

any qualified building constructed by such person and arising out of its use in any trade, business, profession or vocation carried on or exercised by him, at the rate of six and two-third per centum per annum on its cost of construction ;

any unit of non-residential accommodation comprised in a registered Condominium

a sum equal to one-tenth of any payment made, by such person as consideration for the licensing, in his favour, of any manufacturing process used by him in any trade or business carried on by him :

an allowance in respect of any computer software acquired by him during the period of which the profits and income are being ascertained and used by him in any trade, business, profession, or vocation carried on or exercised by him, such allowance being an amount equal, to fifty per centum of the cost of acquisition of such computer software :

any sum expended by such person for the renewal of any capital asset employed by such person for producing such profits or income, if no allowance for the depreciation thereof is deductible in respect of that asset ;

any sum expended by such person for the repair (not renewal) of any plant, machinery, fixtures, building, implement, utensil or article employed for producing such profits and income :

a sum equal to the bad debts incurred by such person in any trade, business, profession, vocation or employment which have become bad debts during the period for which the profits are being ascertained and such sum as the Commissioner-General considers reasonable for doubtful debts to the extent that they are estimated to have become bad during that period, notwithstanding that such bad or doubtful debts were due and payable prior to the commencement of that period :

interest paid or payable by such person ;

any contribution by an employer, to a pension, provident or savings fund, or to a provident or savings society, which is approved by the Commissioner-General subject to such conditions as he may specify ;

any turnover tax payable under the Turnover

tax corresponding to turnover tax referred to in sub-paragraph (i) and payable, under any statute enacted by any Provincial Council, which such person is liable to pay for the period for which the profits and income are being ascertained in respect of any trade, business, profession or vocation carried on or exercised by him :

the expenditure incurred by such person in carrying on any scientific, industrial or agricultural research for the development of the trade or business carried on by such person ;

any expenses incurred by such person in—

opening up any land for cultivation or for animal husbandry ; or

cultivating such land with plants of whatever description ; or

the purchase of livestock or poultry to be reared on such land ; or

the construction of tanks or ponds or the clearing or preparation of any inland waters for the rearing of fish and the purchase of fish to be reared in such tank, pond or inland waters, as the case may be ;

the actual expenses incurred by such person or any other person in his employ in travelling within Sri

in respect of expenses incurred in relation to a vehicle belonging to and maintained by him and used partly for the purposes of his trade, business, profession or vocation and partly for the domestic or private purposes of an executive officer in his employ unless such executive officer has reimbursed such person the expenses actually incurred by him in the use of such vehicle for the private or domestic purposes of such executive officer or where such expenses actually incurred cannot be ascertained, such sum as the Assessor considers to be the amount so incurred ; or

in respect of any expenses incurred by such person by reason of any travelling done by any other person in his employ between the residence of such other person and his place of employment or vice versa ;

in the case of a company, expenditure incurred in the formation or of that company ;

the expenditure incurred by such person in operating a motor coach used for transporting employees of such person to and from their place of work ;

the expenditure incurred by such person in the payment of gratuity to an employee on the termination of employment of such employee due to cessation of the trade, business, profession or vocation carried on by such person ;

any annual payment made by such person to any fund, approved for the purposes of this paragraph, by the Commissioner-General and maintained for the purposes of payment, under the Payment of

such part of the lump sum payment made by such person to any other person in connection with the letting, or lease, to the first-mentioned person of any commercial premises as bears to the total lump sum payment the same proportion as the number of months in the year for which lease rent is payable bears to the total number of months comprised in the lease ;

any sum paid, by a public corporation or Government

expenditure incurred by any person in the training, in any recognized institution for a period not exceeding sixty days, of any employee employed by such person in any trade or business carried on by such person, if it is proved to the satisfaction of the

directly relevant to the duties performed by such employee before the commencement of such training ;

essential for upgrading the skills or performance of such employee, in such trade or business ; and

necessary for improving the efficiency and performance of such trade or business.

“training” includes participation in any seminar or workshop ;

“employee” includes any partner of any partnership carrying on a profession.

an allowance for depreciation equal to the cost of acquisition or the cost of construction, as the case may be, of such capital asset has been granted in respect of that capital asset, such part of the proceeds of disposal as is not in excess of the cost of acquisition or the cost of construction, as the case may be, of such capital asset shall, whether such disposal takes place while such trade, business, profession or vocation continues or after its cessation, be treated as a receipt of such trade, business, profession or vocation, in ascertaining the profits and income, within the meaning of paragraph (a) of section 3, of such trade, business, profession or vocation ;

an allowance for depreciation has been granted in respect of that capital asset but the total amount of such allowance is less than the cost of acquisition or the cost of construction, as the case may be, of such capital asset the proceeds of disposal as is not in excess of the cost of acquisition or the cost of construction as the case may be, of such capital asset over the difference between the cost of acquisition or the cost of construction, as the case may be, of such capital asset and the total allowance for depreciation granted in respect of such capital asset shall whether such disposal takes place while such trade, business, profession or vocation continues or after its cessation, be treated as a receipt of such trade, business, profession or vocation, in ascertaining the profits and income of such trade business, profession or vocation within the meaning of paragraph (a) of section 3 :

the transfer of any such capital asset to a company referred to in section 14(1)(a) (xv) on the conversion of a business carried on by an individual either solely or in partnership to such company ; or

the disposal by any person, of any such capital asset, if the full proceeds of disposal are used by such person, within one year of the disposal for the replacement of such capital asset to be used by him for producing income in any trade business profession, vocation or employment carried on or exercised by him ; or

where a person carrying on any undertaking the profit and income of which are wholly or partly exempt from income tax under this Act, disposes of any capital asset used for the purposes of that undertaking, such person shall be liable to income tax on an amount equal to the amount ascertained under paragraph (a) or paragraph (b).

where it appears to an Assessor that any interest is unpaid and cannot be recovered, any assessment which includes such interest shall, notwithstanding the provisions of section 142, be reduced by the amount of the interest included which has been shown to be unpaid and irrecoverable or, if income tax has been paid in respect of such interest, such tax may be refunded on a claim in writing made within three years of the end of the year of assessment in respect of which such tax was paid ;

where any interest falling due in any year of assessment in respect of a loan has not been received and is likely to be irrecoverable, the person to whom such interest is due may exclude such interest from the profits and income chargeable with income tax for that year of assessment ;

where it appears to an Assessor that any interest which has been excluded from an assessment under paragraph (b) has subsequently been received and that income tax has not been paid in respect of such interest, he shall, notwithstanding anything in subsection (5) of section 134 limiting the period within which an assessment or additional assessment may be made, make an assessment or additional assessment including such interest.

such person has let on hire such capital asset—

to any undertaking the whole or any part, of the profits and income within the meaning of paragraph (a) of section 3, of which are exempt from income tax ; or

for the use in any undertaking carried on by the person from whom it was acquired or by any member of the family of that person or any member of his family in partnership with any other person or persons ; or

such person uses such capital asset in any undertaking carried on by him in partnership with the person from whom it was acquired or with any member of the family of the person from whom it was acquired :

by the other spouse ; or

by a partnership of which that other spouse is a partner, shall be deemed to be the profits and income of that other spouse.

“allowance for depreciation”, in relation to any capital asset, means any allowance which shall be deducted in respect of that asset under—

paragraph (a), paragraph (b) or paragraph (d)

paragraph (a) or paragraph (b) or paragraph (c)

paragraph (a) or paragraph (h) or paragraph (i)

“capital asset” in relation to a trade, business, profession or vocation means plant, machinery, fixture, fittings, utensils, articles or equipment used for the purpose of producing the income in such trade business, profession or vocation or building constructed for the purposes of such trade, business, profession or vocation ;

“proceeds” in relation to the disposal of any capital asset means—

the sale price of such asset, where the disposal is by sale ; or

the market value of such asset at the time of disposal, where the disposal is otherwise than by sale, after deducting from such sale price or market value, as the case may be, the amount of goods and services tax chargeable under the Goods Services Tax Act, No. 34 of 1996, on the disposal of such capital asset if such tax is included in such sale price or market value, as the case may be ;

“disposal”, in relation to the disposal of any capital asset by any person includes—

sale, exchange, or other transfer in any manner whatsoever of such asset by such person ;

discard of such asset by such person ;

cessation of the use of such asset by such person in any undertaking carried on by him in ascertaining the profits and income of which, an allowance for depreciation could be deducted ;

“qualified building” means a building constructed to be used for the purpose of a trade, business, profession or vocation other than to be used as a dwelling house by an executive officer employed in that trade, business, profession or vocation ;

(i)

the cost of acquisition or the cost of construction, as the case may be, of such asset ; and

the total allowance for depreciation granted in respect of such capital asset ;

where any plant, machinery or fixtures is acquired otherwise than by way of purchase, by any person to be used in any trade, business, profession or vocation carried on or exercised by him, the cost of acquisition of such plant, machinery or fixtures shall be the market value of such plant, machinery or fixtures, on the date of such acquisition ;

where any capital asset of a business carried on by an individual, either solely or in partnership with others, is transferred, to a company referred to in paragraph (xv) of subsection (1) of section 14, the cost of acquisition of such capital asset by such company shall be deemed to be the cost of acquisition of such capital asset by such individual or partnership reduced by the amount of any allowance for depreciation granted inrespect of such asset to such individual or partnership and the date of acquisition of such capital asset shall be deemed to be the date of acquisition of such capital asset by such individual or partnership ;

where any person is entitled under the Goods and Services Tax Act, No. 34 of 1996, to claim credit for input tax paid in relation to the acquisition or the construction of any capital asset, the cost of acquisition or the cost of construction, as the case may be, of such capital asset shall not include such input tax.