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47 1956

FINANCE (MISCELLANEOUS PROVISIONS) ACT, 1956

PART IV.

Industrial Building Allowances.

Industrial building allowances.

16. —(1) Where, on or after the 30th day of September, 1956, a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade carried on by him, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, an allowance (in this Part of this Act referred to as an industrial building allowance) equal to one-tenth of the expenditure, and such allowance shall be made as a deduction in charging the profits or gains of the trade.

(2) Notwithstanding any other provision of this section, no industrial building allowance shall be made in respect of any expenditure on a building or structure if the building or structure, when it comes to be used, is not an industrial building or structure, and where an industrial building allowance has been granted in respect of any expenditure on any such building or structure, any necessary additional assessments may be made to give effect to this subsection.

(3) For the purposes of this section—

(a) any expenditure incurred on or after the 30th day of September, 1956, for the purposes of a trade by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on,

(b) capital expenditure shall not include any expenditure which is allowed to be deducted in computing, for the purposes of income tax, the profits or gains of a trade carried on by the person incurring the expenditure, and

(c) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority.

(4) For the purposes of this Part of this Act, the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable.

(5) Where full effect cannot be given to a deduction under this section in any year owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the deduction, the deduction or part of the deduction to which effect has not been given, as the case may be, shall, for the purpose of making the assessment for the following year, be added to the amount of the deduction in respect of industrial building allowance for that year, and deemed to be part of that deduction, or, if there is no such deduction for that year, be deemed to be the deduction for that year, and so on for succeeding years.

(6) Any claim by a person for an allowance under this section in charging the profits or gains of his trade shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the construction of an industrial building or structure and giving such particulars as show that the allowance falls to be made.

Meaning of “industrial building or structure”.

17. —(1) In this Part of this Act, “industrial building or structure” means a building or structure in use—

(a) for the purposes of a trade carried on in a mill, factory or other similar premises, or

(b) for the purposes of the trade of hotel-keeping.

(2) Subsection (1) of this section shall apply in relation to a part of a trade as it applies in relation to a trade, but where part only of a trade complies with the conditions set out in that subsection, a building or structure shall not, by virtue of this subsection, be an industrial building or structure unless it is in use for the purposes of that part of that trade.

(3) (a) Notwithstanding anything in subsection (1) or subsection (2) of this section, but subject to subsection (4) of this section, in this Part of this Act “industrial building or structure” does not include any building or structure in use as, or as part of, a dwelling-house, retail shop, showroom or office or for any purpose ancillary to the purposes of a dwelling-house, retail shop, showroom or office.

(b) In this subsection “retail shop” includes any premises of a similar character where retail trade or business (including repair work) is carried on.

(4) Where part of the whole of a building or structure is, and part thereof is not, an industrial building or structure, and the capital expenditure which has been incurred on the construction of the second-mentioned part is not more than one-tenth of the total capital expenditure which has been incurred on the construction of the whole building or structure, the whole building or structure and every part thereof shall be treated as an industrial building or structure.

(5) Any reference in this Part of this Act to a building or structure shall be construed as including a reference to a part of a building or structure except where the reference is comprised in a reference to the whole of a building or structure.

Meaning of “basis period”.

18. —(1) In this Part of this Act, “basis period” has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an allowance falls to be made under this Part of this Act, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D of the Income Tax Act, 1918, in respect of the trade in question or, where, by virtue of any Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade—

(a) where two basis periods overlap, the period common to both shall be deemed for the purposes of this subsection to fall in the first basis period only;

(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade, the interval shall be deemed to be part of the second basis period; and

(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) (a) Any reference in the proviso to subsection (2) of this section to the permanent discontinuance of a trade shall be construed as including a reference to the occurring of any event which, under any of the provisions of the Income Tax Acts, is to be treated as equivalent to the permanent discontinuance of a trade.

(b) Any reference in the said proviso to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

Interpretation of reference to expenditure on construction of building or structure.

19. —A reference in this Part of this Act to expenditure incurred on the construction of a building or structure does not include—

(a) any expenditure incurred on the acquisition of, or of rights in or over, any land, or

(b) any expenditure incurred on preparing, cutting, tunnelling or levelling any land,

but paragraph (b) of this section shall not apply to expenditure on work done on the land to be covered by a building or structure for the purposes of preparing the land to receive the foundations of the building or structure, being work which may be expected to be valueless when the building or structure is demolished and not being work which consists of cutting or tunnelling.

Industrial building allowances in relation to corporation profits tax.

20. —Where this Part of this Act provides for an industrial building allowance to be made to a company for the purposes of income tax, in respect of any expenditure, the amount of the allowance shall be deducted in computing the profits of that company for the purposes of corporation profits tax for the accounting period in which the expenditure is incurred.