Inland Revenue (Amendment) Act 2004 · As enacted
16. Amendment of section 29 of the principal enactment
Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk
Official translationFrom Department of Government Printing, unchanged
Section 29 of the principal enactment as last amended by Act, No. 37 of 2003, is hereby further amended as follows
:—
by the insertion immediately after subsection (1B)
of that section of the following :—
“For the purposes of subsection (1A) and (1B), a
“primary market transaction” means the purchase of any Security or Treasury Bond issued under the
Registered Stocks and Securities Ordinance
(Chapter 420) or Treasury Bill issued under the
Local Treasury Bills Ordinance (Chapter 417) or
Central Bank Security issued under the Monetary
Law Act, (Chapter 422) at the time of the original issue of such Security, Bill or Bond, by any primary dealer subject to any discount or payment of interest by the issuer.”;
by the repeal of subsection (1C) of that section, and the substitution therefore of the following subsection :—
“(1C)
The assessable income of any person shall not include —
(i)
any reward received by such person as an informer under any scheme for the payment of such rewards; or
a share of fine received by such person under any scheme for the distribution of such share of fine, form any Government Institution, on or after April 1, 2003, from which income tax has been deducted in accordance with Chapter XVIB;
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the receipt of any lottery prize or winnings from gambling or betting from which tax has been deducted under section 132A ; and
interest received on the compensation payable in respect of any immovable or movable property vested in the
Government or in the Land Reform
Commission or in a Public Corporation from which the income tax has been deducted under section 33.”;
in subsection (2) of that section—
by the substitution in paragraph (aa) of that subsection, for the words “on or after April 1,
2002”, of the words “on or after April 1, 2002
but prior to April 1, 2004”;
by the insertion immediately after paragraph (aa) of that subsection, of the following new paragraph :—
“(aaa) sums paid by such person for any year of assessment commencing on or after
April 1, 2004 by way of annuity, ground rent, royalty or interest not deductible under section 23, which amount has not previously been allowed as a deduction under this section on the basis of amount payable or paid :
Provided that —
no deduction shall be allowed in respect of any such sum paid unless the assessor is satisfied that the recipient of such payment has issued a valid
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receipt for such payment, containing name, address and the income tax file number (if any) of such person in Sri Lanka or that the tax has been deducted under this Act before or at the time such payment is made;
where for any year of assessment any such sum paid and deductible under this subsection 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 any sum is paid by such person by way of an annuity, no deduction shall be allowed in respect of such annuity, unless such annuity is paid—
under an order of court by way of payment of alimony or maintenance;
to his spouse under a duly executed deed of separation; or
in return for full consideration in money or money’s worth.
where any sum is paid by such person by way of interest, no deduction shall be allowed in
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respect of such interest unless such interest is paid under any legal or contractual obligation—
to any bank licensed under the Banking Act,
No. 30 of 1988 or any finance company registered under the
Finance Company Act,
No. 78 of 1988; or
to any other person recognized by the
Commissioner-General for the purposes of this paragraph :
Provided however, where the
Commissioner-General is satisfied that such recipient of interest has declared such interest as income under this
Act, such person may be deemed to be a recognized person.
For the purposes of this paragraph the term “interest”
means any interest paid on a loan the proceeds of which are utilized —
for the construction or purchase of any house for residential purposes or for the purchase of any site for the
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construction of any such house for residential purposes;
in any trade, business, profession or vocation carried on or exercised by him.”;
by the omission of all the words from “which if it had been a profit” to “as the case may be;”, appearing immediately after paragraph (c) of that subsection;
by the substitution in paragraph (d) of that section, for the words “income of a previous year of assessment;”, of the words —
“income of a previous year of assessment, which if it had been a profit would have been assessable and which had not been allowed against his total statutory income for any year of assessment within such period of six years or eleven years, as the case may be:”;
the proviso to paragraph (d), and the proviso to subsection (2) as inserted by Act No. 37 of 2003, are hereby repealed ;
by the insertion immediately after paragraph (e) of that subsection, the following new paragraph :—
The amount of a loss (other than any capital loss) incurred by such person in any year of assessment commencing on or after April 1, 2004, in any trade, business, profession or vocation which if it had been a profit would
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have been assessable under this Act, including any such loss brought forward from a previous year which has not been deducted under this section previously, and any deemed loss under paragraph (ii) of proviso to paragraph (aaa) of subsection (2), and where such amount of the loss has been ascertained in the manner provided in this Act for ascertainment of profits from a trade, business, profession or vocation and claimed in the return of income furnished by such person and supported by a statement of account certified by an approved accountant, up to a maximum limit of thirty five per centum of the total statutory income for that year, and any loss which cannot be deducted may be carried forward to the next year of assessment, and so on :
Provided however—
no loss incurred on the disposal of shares, rights or warrants in a company as referred to in section 38D of this Act, shall be a loss deductible under this paragraph ;
no loss can be carried forward beyond the year of assessment in which the death of such person occurred in the case of an individual, or liquidation of such person occurred in the case of a company or other body of persons.
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where any person has been declared or adjudged insolvent by a competent court, no loss incurred prior to the date of bankruptcy or insolvency, as the case may be, shall be deducted from income arising ;
no loss can be deducted which is incurred by a company in which there had been a 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.
For the purpose of this paragraph, a change of ownership of a company is deemed to have occurred where more than one-third of the issued share capital of the company is held, at any time in the year of assessment for which the claim for deduction, is made either directly or through nominees, by persons who did not hold such share capital, at any time in the year of assessment in which the loss was incurred.”;
by the insertion immediately after subsection (2)
of that section, the following new subsection :—
The provisions of paragraphs (b), (c), (d)
and (e) of subsection (2), shall have no application with effect from April 1, 2004.”; and
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by the substitution in paragraph (b) of subsection (3) of that section, for the words and figures
“provided in paragraph (b), (c) or (d) of subsection (2).”, of the words and figures “provided in paragraphs (b), (c), (d) or (f) of subsection (2).”.