Inland Revenue (Amendment) Act 2004 · As enacted
14. Amendment of section 23 of the principal enactment
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Section 23 of the principal enactment as last amended by Act, No. 19 of 2003, is hereby further amended as follows
:—
in subsection (1) of that section —
by the substitution in paragraph (a) of that subsection, for the words “by such person;”, of the words and figures “by such person, for any year of assessment commencing on or before April 1, 2003;”;
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by the substitution in paragraph (b) of that subsection, for the words “an allowance for depreciation”, of the words and figures “for any year of assessment commencing on or before
April 1, 2003, an allowance for depreciation”;
by the insertion immediately after paragraph (b) of that subsection, of the following new paragraph :—
“(bb) an allowance for depreciation by wear and tear of the following assets acquired, constructed or assembled and arising out of their use on or after April 1, 2004, by such person in any trade, business, profession or vocation carried on by him —
information technology equipments and calculating equipment including accessories acquired or assembled by such person and software, acquired by such person, at the rate of twenty five per centum per annum on the cost of acquisition or assembling of such equipments, as the case may be ;
any motor vehicle or furniture acquired by such person, at the rate of twenty per centum per annum, on the cost of acquisition ;
any other machinery or equipment not referred to in sub paragraphs (i) and (ii)
above and any plant acquired or assembled by such person, at the rate of twelve and one half per centum per annum, on the cost of acquisition or assembly ;
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any intangible assets (other than good-will) acquired by such person, at the rate of ten per centum per annum, on the cost of acquisition ;
any bridge, railway, reservoir, electricity or water distribution line and toll roads constructed by such person or acquired from a person who has constructed such assets during the period of such ownership, at the rate of six and two third per centum per annum, on the cost of construction or cost of acquisition as the case may be ;
any qualified building or any unit of a condominium property acquired which is approved by the Urban Development
Authority established by the Urban
Development Authority Law, No. 41 of 1978, and constructed to be used as a commercial unit or hotel building
(including a hotel building complex) or industrial building or industrial building complex acquired from a person who has used such buildings in any trade or business, at the rate of six and two third per centum per annum, on the cost of construction or cost of acquisition as the case may be :
Provided that no deduction under the preceding provisions of this paragraph shall be allowed to a person in respect of any capital asset referred to in sub-paragraphs (i), (ii), (iii), (iv), (v) or this paragraph in respect of which the total of the allowances granted for depreciation in the preceding years of
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assessment is equal to the cost of acquisition or cost of construction or assembling, as the case may be, of such capital asset by such person ;”;
by the substitution in paragraph (cc) of that subsection, for the words and figures “on or after April 1, 2002”, of the words and figures
“on or after April 1, 2002 but on or before
March 31, 2004”;
by the substitution in paragraph (d) of that subsection, for the words “acquisition of such computer software:”, of the words and figures
“acquisition of such computer software on or before March 31, 2004:”;
by the insertion immediately after the proviso to paragraph (f) of that subsection, the following new proviso :—
“Provided further that for any year of assessment commencing on or after April 1,
2004, the provisions of sub-paragraph (ii)
above, shall be applicable to the business of letting any premises ;”;
by the substitution :—
in paragraph (g) of that subsection, for the words “sum equal to the bad debts”, of the words “sum equal to the bad debts representing the supply of goods or services by such person on credit”; and
in the proviso to paragraph (g) of that subsection, by the substitution for the words “vocation or employment ;”, of the words “vocation or employment and for
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the purpose of this proviso, sums recovered shall be deemed to include any reduction as at the last date of such period in any estimated amount of a doubtful debt previously allowed as a deduction;”;
by the substitution for sub-paragraph (i) of the proviso to paragraph (m) of that subsection, of the following sub-paragraphs :—
“(ia)
in respect of expenses incurred in relation to a vehicle used partly for the purposes of his trade, business, profession or vocation and partly for the domestic or private purposes of an executive officer being employed by him or a non-executive director of such organization, unless the value of the benefit as specified under the proviso to paragraph (b) of subsection (2) of section 4 of this Act has been included in the remuneration of such officer, for the purposes of deduction of income tax under Chapter
XIV of this Act;
in respect of expenses incurred in relation to a vehicle, where more than one vehicle is provided to any employee of such person or to any non-executive director or to any other individual who is not an employee but rendering services in the trade, business profession or vocation carried on by such person, if such vehicle is not the first vehicle provided to such employee, or non-executive director or such other individual, as the case may be;
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in respect of expenses incurred in relation to a vehicle where such vehicle is provided to any other person who is not an employee of such person and who does not render any services to the trade, business, profession or vocation carried on by such person;
in respect of expenses incurred in relation to the reimbursement of any expenditure on a vehicle belonging to an employee of such person who has been allowed by the employer to claim such expenses, unless the value of benefit of using such vehicle for non-business purposes by such employee as determined by the
Commissioner General has been included in the remuneration of such employee for the purposes of deduction of income tax under Chapter XIV, or in the opinion of the Commissioner General such amount that is reimbursed represents only expense on allowable traveling expenses in relation to the trade business, profession or vocation carried on by such employer;
For the purposes of sub-paragraphs (ia), (ib) and (ic) the “expenses incurred”
shall not include any lease rental or other rental payment in respect of such vehicle or the cost of acquisition or the cost of financing of the acquisition of such vehicle;”
by the substitution in paragraph (r) of that subsection for the words “of the lump sum payment”, of the words “of the lump sum payment, which not being an advance payment”, ; and
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“(j)
by the substitution in paragraph (s) of that subsection for the words “sum paid, by a”, of the words” sum paid on or before March 31,
2004, by a”.
in subsection (3) of that section by the substitution for the words “Where any person” and of the words
“carried on or exercised by him”, of the words
“Subject to the provisions of subsection (3A), where any person”, and of the words “carried on or exercised by him, whether such profits and income are fully or partly exempt from income tax,”
respectively.
by the insertion immediately after subsection (3)
of that section, of the following new subsection :—
“(3a) Where a disposal takes place under the provisions of subsection (3) on or after April 01,
2004, the total proceeds of the disposal shall be taken into account in calculating such receipt or expenditure, as the case may be, from such trade, business, profession or vocation.”;
in subsection (5) of that section by the substitution for the words “paragraph (a) or paragraph (b)”, of the words “paragraph (a) or paragraph (b) or paragraph (bb),”;
in subsection (7) of that section —
by the substitution in sub-paragraph (i) of paragraph (a) of that subsection, for the words
“paragraph (a), paragraph (b)”, of the words
“paragraph (a), paragraph (b), paragraph (bb)”;
by the substitution in paragraph (b) of that subsection, for the words “utensils, articles or equipment”, of the words “utensils, articles or equipment or any bridge, railway, reservoir electricity or water distribution lines, toll roads”;
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by the substitution in sup-paragraph (iii) of paragraph (f) for the words “to a company referred to in paragraph (xv) of subsection (1)
of section 14,”, of the words “to a company which is incorporated mainly for the acquisition of the assets of that business,”; and
by the insertion immediately after sub-paragraph (iv) of paragraph (f), of the following new sub-paragraph :—
“(v)
where any asset used in the business of leasing as part of the leasing stock is disposed of subsequently, either by transferring such asset out of the leasing stock or by fransferring such stock to the lessee, the market value as at the time of such transfer of such asset shall be deemed to be a receipt from such trade or business of the lessor, unless such lessor proves to the satisfaction of the assessor that all receipts under such lease agreement, including total rentals receivable or received, as the case may be, advance payments received, early settlement fees and all other similar receipts have been considered as taxable receipts in computing profits or income from such business ;
where any person has obtained an asset under a lease agreement and the relevant lease rentals have been allowed to such person as expenditure incurred in any trade, business, profession or vocation either fully or partly, the receipts from disposal of such asset, less any cost of acquisition other than lease rentals paid on such asset by such person after acquiring it directly or through a nominee, shall be treated as a receipt from such trade, business, profession or vocation of such lessee ;
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where any lessee has acquired any asset used by him in any trade, business, profession or vocation under a lease agreement, such acquisition shall not be considered as an acquisition which qualifies for any depreciation allowance under this section, and such asset shall be treated as an asset on which depreciation has been granted to such lessee to the extent of the repayment of the capital value of such asset under such lease agreement by such lessee.”.