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(1)In computing for any accounting period (whether beginning before or after the commencement of this Act) the profits chargeable to corporation tax of a Passenger Transport Executive or of the London Transport Executive, there shall be left out of account—
(a)any amounts paid to Passenger Transport Executives in pursuance of precepts issued under section 13 of the Transport Act 1968 ;
(b)any grants made to the London Transport Executive by the Greater London Council under section 3(1)(a) of the Transport (London) Act 1969.
(2)In computing the profit or loss of a Passenger Transport Executive in its trade in the first accounting period ending after 5th April 1970, the Executive shall be treated as having incurred a loss equal to the aggregate of the income tax losses and allowances (as defined in subsection (3) below) of each local authority whose interests in a transport undertaking (in this section referred to in relation to the local authority as " the transferred undertaking ") were transferred to the Executive by virtue of an order under section 17 of the Transport Act 1968; and section 177(1) of the Taxes Act (set-off of losses against trading income in succeeding accounting periods) shall apply accordingly.
(3)For the purposes of subsection (2) above the income tax losses and allowances of a local authority means the following losses and allowances attributable to the transferred undertaking namely—
(a)those losses (if any) which were incurred in or before the year 1965-66 in carrying on the undertaking and which, apart from any provision of the Finance Act 1965 (and in particular section 66, which exempted a local authority from income tax and corporation tax) would have been available to the local authority for set-off for tax purposes in the following year of assessment against income arising from the undertaking: and
(b)so much of the allowances which by virtue of section 323 of the Income Tax Act 1952 were in the year 1965-66 available as a deduction in charging the profits or gains of the transferred undertaking for that year as, apart from any such provision as is referred to in paragraph (a) above, would have been available as such a deduction in the following year of assessment.
(4)The provisions of Schedule 3 to this Act shall have effect in consequence of the transfer, under Part III of the Transport (London) Act 1969 of the property, rights, liabilities and functions of the London Transport Board to the London Transport Executive and London Country Bus Services Limited (being the subsidiary of the National Bus Company which is " the designated company " for the purposes of that Act).
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