23.
| (1) Subject to the provisions of subsections (2) and (4), there shall be deducted for the purpose of ascertaining the profits or income of any person from any source, all outgoings and expenses incurred by such person in the production thereof, including -
| | (a) an allowance in respect of any plant, machinery or fixtures 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 the cost of acquisition of such plant, machinery or fixtures: | | |
| | (b) an allowance equal to the sum expended by him during the period of which the profits and income are being ascertained-
| | | (i) in the construction, for the purposes of any undertaking carried on by him, of a building for occupation as a dwelling house by any member of the staff employed by him in such undertaking, other than an executive officer; or |
| (ii) in the renovation of, or in the making of any additions or improvements to, any existing building or in the erection of any building, by such person for any such undertaking of operating hotels for tourists as is not referred to in paragraph (a) of section 16 and as is on the recommendation of the Ceylon Tourist Board approved by the Minister by Order published in the Gazette for the purposes of this paragraph; |
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| | (c) an allowance equal to fifty per centum of any sum expended by such person during the period of which the profits and income are being ascertained but prior to April 1, 1980, in the construction of any building for the purposes of any trade or business carried on by him, other than for use as a dwelling house ; | | |
| | (d) an allowance equal to the sum expended by such person in the purchase of -
| | | (i) any furniture, utensils or articles for any undertaking-
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| (ii) any implement or equipment for any under- taking of deep-sea or off-shore fishing carried on by such person ; |
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| | (e) such allowance as the Commissioner-General considers reasonable for such depreciation by wear and tear of plant, machinery, and fixtures acquired by such person or of qualified buildings constructed by such person, as arises out of their use on or after April 1, 1980, by him in a trade, business, profession or vocation carried on or exercised by him, such allowance being calculated normally at a fixed rate per centum per annum on their cost of acquisition or on the cost of construction, as the case may be : | | |
| | (f) 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; | | |
| | (g) any sum expended by such person for the repair (not renewal) of any plant, machinery, fixtures, building, implement, utensils or articles employed for producing such profits and income : | | |
| | (h) 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 : | | |
| | (i) interest paid or payable by such person ; | | |
| | (j) 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 prescribe ; | | |
| | (k) business turnover tax which such person is liable to pay for the period for which the profits and in come are being ascertained in respect of any trade, business, profession or vocation carried on or exercised by him ; | | |
| | (l) 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; | | |
| | (m) any expenses incurred by such person in -
| | | (i) opening up any land for cultivation or for animal husbandry; or |
| (ii) cultivating that land with plants of whatever description; or |
| (iii) the purchase of livestock or poultry to be reared on that land ; or |
| (iv) the construction of tanks or ponds or the clearing and 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; |
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| | (n) the actual expenses incurred by such person or any other person in his employ in travelling within Sri Lanka in connection with the trade, business, profession or vocation of the first-mentioned person : | | |
| | (o) in the case of a company, expenditure incurred in the formation of that company. | | |
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| (2) Where any person is entitled to a deduction in respect of any outgoing or expense under two or more paragraphs of subsection (1), in ascertaining the profits and income of such person from any source such person shall be allowed a deduction only under one such paragraph. |
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| (3)
| | (a) Where any person disposes of any capital asset used by him in producing the profits and income of any trade, business, profession or vocation and a total amount equal to the cost of acquisition or the cost of construction, as the case may be, of such capital asset has been granted as allowance for depreciation of such capital asset, the full amount of the proceeds of such disposal, whether such disposal takes place while such trade, business, profession or vocation continues or on or after its cessation, shall 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. | | |
| | (b) Where any person disposes of any capital asset used by him in producing the profits and income of any trade, business, profession or vocation carried on or exercised by him and 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 excess of the proceeds of such disposal over the difference between the cost of acquisition or the cost of construction 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 : | | |
| | (c) Where a person carrying on any undertaking the pro fits 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). | | |
| | (d) Where any capital asset referred to in paragraph (a) or paragraph (b) was only partly used in any trade, business, profession or vocation the amount treated as a receipt under paragraph (a) or paragraph (b) or the amount treated as an expense under paragraph (b) shall be proportionately reduced. | | |
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| (4) Subject as hereinafter provided, income arising from interest shall be the full amount of interest falling due whether received or not, without any deduction for out goings or expenses : |
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| (5) No deduction under subsection (1) (a), (1) (b), (1) (c), (1) (d), (1) (e), or (1) (f) in respect of any capital asset shall be allowed to any person if- (b) 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: | | (a) such person has let on hire -
| | | (i) 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 |
| (ii) such capital asset for 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 per- sons ; or |
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| (6) Profits and income received by one spouse for services rendered in any trade, business, profession or vocation carried on or exercised-
| | (a) by the other spouse ; or | | |
| | (b) by a partnership of which that other spouse is a partner, | | |
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| (7) For the purposes of this section -
| | (a) " allowance for depreciation", in relation to any capital asset, means any allowance which shall be deducted in respect of that asset under -
| | | (i) paragraph (a) or paragraph (b) or paragraph (c) or paragraph (d) or paragraph (c) of subsection (1) of this section, or subsection (1) of section 162, |
| (ii) paragraph (a) or paragraph (h) or paragraph (i) or paragraph (l) or paragraph (m) or paragraph (n) or paragraph (o) or para graph (p) of subsection (1) of section 10 of the Inland Revenue Act, No. 4 of 1963, or |
| (iii) paragraph (a) of subsection (1) or under sub- section (5B) or under subsection (5c) of section 11 of the Income Tax Ordinance ; |
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| | (b) "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 ; | | |
| | (c) " proceeds " in relation to the disposal of any capital asset means -
| | | (i) the sale price of such asset, where the disposal is by sale, or |
| (ii) the market value of such asset at the time of disposal, where the disposal is otherwise than by sale; |
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| | (d) " disposal", in relation to the disposal of any capital asset by any person includes -
| | | (i) sale, exchange, or other transfer in any manner whatsoever of such asset by such person; |
| (ii) discard of such asset by such person ; |
| (iii) the cessation of the use of such asset by such person in an undertaking carried on by him in ascertaining the profits and income of which, an allowance for depreciation could be deducted ; and |
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| | (e) " qualified building" means a building constructed for use for the purposes of a trade, business, profession or vocation other than for use as a dwelling house by an executive officer employed in that trade, business, profession or vocation. | | |
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Sri Lanka Consolidated Acts