Finance Act 1946

34 Amendment of Income Tax Act, I945, s. 59.

(1) Subsection (3) of section fifty-nine of the Income Tax Act, 1945 (which, amongst other things, prohibits the making of initial allowances in certain cases to a buyer of machinery or plant) shall, in the case of a sale to which this section applies, have effect subject to the modification hereinafter specified.

(2) This section applies to any sale of machinery or plant where—

(a) the sale is one to which paragraph (a) of subsection (1) of the said section fifty-nine applies and paragraph (b) of the said subsection (1) does not apply ; and

(b) an initial allowance fell to be made to the seller of the machinery or plant in respect of the capital expenditure which he incurred on 'the provision thereof; and

(c) a balancing charge is made on the seller by reason of the sale ; and

(d) the price which the machinery or plant would have fetched if sold in the open market at the time of the sale exceeds four-fifths of the limit of recharge on the seller.

(3) The modification referred to is that paragraph (a) of subsection (3) of the said section fifty-nine shall not apply but the initial allowance to the buyer shall not exceed whichever of the three following amounts is the lowest, that is to say—

(a) the excess of the said price over four-fifths of the said limit of recharge ;

(b) the initial allowance which fell to be made to the seller as aforesaid ;

(c) the amount on which a balancing charge is made on the seller as aforesaid.

(4) Expressions used in the preceding provisions of this section have the meanings which they have in subsection (3) of the said section fifty-nine.