29. Deductions from total statutory income in arriving at assessable income

sums payable by such person for that year of assessment by way of annuity, ground rent, royalty or interest not deductible under section 23 ;

no deduction shall be allowed in respect of any sum payable by way of interest, annuity, ground rent or royalty by a person out of Sri Lanka to another person out of Sri Lanka ;

where for any year of assessment any such sum payable exceeds the total statutory income for that year, the excess shall be treated for the purposes of this section in the same manner as a loss incurred in a trade during that year ;

where, at the time of making any assessment, it appears to an Assessor that any sum so payable has not been paid, he may refuse to allow any deduction in respect of that sum ;

where it appears to an Assessor that any sum in respect of which a deduction has been refused under paragraph (iii) has subsequently been paid, such person shall, on application made in writing within twelve months of making such payment and supported by such proof as he may require, make an amended assessment allowing such deduction notwithstanding the provisions of section 142 ; and any tax found to have been paid in excess as a result of such amended assessment shall be refunded notwithstanding the provisions of section 169 ; and

where any sum is payable by such person by way of an annuity, no deduction shall be allowed in respect of any such sum payable by him during the year of assessment in which such annuity is created and during any year of assessment succeeding that year of assessment unless such annuity is—

paid under an order of court by way of payment of alimony or maintenance ;

paid to his spouse under a duly executed deed of separation ; or

in return, for full consideration in money or moneys worth.

for the construction or purchase of any building, or for the purchase of any site for the construction of any building ;

for the purchase of any share in any company ; or

in any trade, business, profession or vocation, carried on or exercised by him ;

the amount of a loss (other than such part, if any, of such loss as consists of a capital loss, a loss referred to in subsection (6), a loss referred to in subsection (7), a loss referred to in subsection (8), a loss referred to in paragraph (c) and a loss attributable to any allowance for depreciation or any sum referred to in paragraph (e) of subsection (1) of section 23), incurred by him in any trade, business, profession or vocation during any year of assessment being any year of assessment within the period of six years immediately preceding the first-mentioned year of assessment, or

the amount of a loss (other than such part, if any, of such loss as is attributable to any allowance for depreciation or any sum referred to in paragraph (e)

such part, if any, of such loss as is attributable to any allowance for depreciation, incurred by him in any trade, business, profession or vocation during any year of assessment and which has not been allowed against his total statutory income of a previous year of assessment ;

in no circumstances shall the aggregate of the deductions from the total statutory income in respect of any loss exceed the amount of such loss ;

a deduction under this paragraph shall be made as far as possible from the total statutory income of the year of assessment in which the loss was incurred and as far as it cannot be so made, then from the total statutory income of the next year of assessment and so on ;

no deduction shall be made under this paragraph or under subparagraph (b) of subsection (3) in respect of a loss incurred by a company in which there had been change of ownership otherwise than by way of testate or intestate succession, except against the statutory income of such trade or business of the company as that in which the loss was incurred.

Where the profits and income of an undertaking were exempt from income tax, under section 17

the total of any losses incurred by such person in such undertaking in any year of assessment during the exempt period, over

such profits and income of that undertaking as were exempt from income tax for any year of assessment during the exempt period succeeding the year of assessment in which such loss in that undertaking was incurred.

Where the entirety or any portion of the balance of such losses referred to in paragraph (a) cannot be deducted from the total statutory income of such person for the year of assessment referred to in paragraph (a), the residue, if any, of such entirety or of such portion, after, its deduction from the total statutory income of such person for that year of assessment, shall be deemed to be a loss incurred by such person in that undertaking in the year of assessment immediately succeeding that year of assessment and may accordingly be deducted in the manner provided in paragraph (b) (c) or (d) of subsection (2).

in no circumstances shall the aggregate deduction from the statutory income in respect of any loss exceed the amount of such loss ; and

a deduction under this subsection shall be made as far as possible from the statutory income of the first year of assessment preceding that in which the loss was incurred, and so far as it connot be so made, from the statutory income of the next preceding year of assessment and so on,

There shall be deducted from the total statutory income of a person for any year of assessment, if such income includes capital gains, the amount of any capital loss of that person for that year of assessment, which if it had been a profit would have been assessable under this Act :

such deduction shall in no case exceed the amount of the capital gain included in such total statutory income ;

where the capital loss of any person for any year of assessment exceeds the capital gain of such person for that year of assessment such excess shall be a capital loss of that person for the next succeeding year of assessment ;

where in any year of assessment the income of any person includes more than one capital gain, such deduction shall be made from the capital gain taxable at the lowest rate specified in subsection (3) and subsection (4) of section 32, if applicable, and thereafter from the capital gain taxable at the next highest rate, if applicable, and so on ; and

no deduction shall be made in respect of any capital loss arising from the disposal of any capital asset used by such person for producing profits or income of any trade, business, profession or vocation carried on or exercised by him, if a deduction for depreciation in respect of such asset has been allowed under section 23 of this Act, or under section 23 of the

“Capital loss”—

with reference to the capital loss of a person arising from a change of ownership of any property means, subject to the provisions of subsection (4) of section 7, the amount by which the value of that property at the time when such change of ownership occurs is less than its value at the time when it was acquired by that person ;

with reference to the capital loss of any person arising from the redemption of any shares debentures or other obligations, means, subject to the provisions of subsection (4) of section 7, the amount by which the value of all property received by him in consequence of such redemption is less than the value of that which is redeemed at the time of its acquisition or where that which is redeemed is any property referred to in paragraph (e) or paragraph (f) or paragraph (g) or paragraph (h) of subsection (3) of section 7, is less than such value of that property as is specified in that paragraph ;

with reference to the capital loss of any person arising from the dissolution of a business or the liquidation of a company, means, subject to the provisions of subsection (4) of section (7), the amount by which the value of all property received by him in consequence of such dissolution or liquidation is less than the value of his share of the capital of such business or company at the time when such share was acquired by him ; and

includes the amount of any debt (other than a trade debt) which is proved to be due by documentary evidence and which is proved to be irrecoverable.

In computing the amount of a capital loss, any expenditure of the description referred to in paragraphs (a), (b) or (c) of subsection (4) of section 7 shall be taken into account.

Where a person dies and has any capital loss for the last year of assessment for which he was liable to be assessed for income tax, the amount of such capital loss shall, as far as is practicable, be deducted from his statutory income from all sources for such last year of assessment, and if it cannot be so deducted, from his statutory income from all sources for any of the three years of assessment in order of recession immediately preceding such last year of assessment.

Where a deduction is made from the statutory income of any person for any year of assessment under subparagraph (i), the tax for that year of assessment in respect of him shall, notwithstanding anything in section 142, be revised taking into consideration such deduction and the amount of the difference between the amount of the tax paid by him in respect of that year of assessment and the amount of the revised tax for that year of assessment shall, if there is an executor of the deceased, be refunded to such executor, and if there is no such executor, be refunded to such person or persons as is or are in the opinion of the Commissioner-General, entitled to such refund.

Where a company is liquidated and such company has any capital loss for the last year of assessment for which it was liable to be assessed for income tax, the amount of such capital loss shall, as far as practicable, be deducted from the statutory income from all sources of such company for such last year of assessment, and, if it cannot be so deducted, from the statutory income from all sources of such company for any of the three years of assessment in order of recession immediately preceding such last year of assessment.

Where a deduction is made from the statutory income of any company for any year of assessment under subparagraph (iii), the tax for that year of assessment in respect of such company shall, notwithstanding the provisions of section 142, be revised, taking into consideration such deduction, and the difference between the amount of the tax paid by such company in respect of that year of assessment and the amount of the revised tax for that year of assessment shall be refunded.

In computing the capital loss of a person under this subsection, the provisions of subsection (3)