Section 24.
1(1)The events giving rise to balancing allowances or balancing charges under Chapter II of Part X of the Income Tax Act, 1952 (in this Part of this Schedule referred to as " the principal Chapter ") shall not be confined to events occurring before the permanent discontinuance of the trade, and subsection (1) of section two hundred and ninety-two of that Act shall have effect with the substitution for paragraphs (a) to (d) (which specify the events giving rise to balancing allowances and balancing charges) of the following paragraphs:—
“(a)any event occurring after the setting up and before the permanent discontinuance of the trade whereby the machinery or plant ceases to belong to the person carrying on the trade (whether on a sale of the machinery or plant or in any other circumstances of any description), or
(b)any event occurring as aforesaid whereby the machinery or plant (while continuing to belong to the person carrying on the trade) permanently ceases to be used for the purposes of a trade carried on by him, or
(c)the permanent discontinuance of the trade, the machinery or plant not having previously ceased to belong to the person carrying on the trade”,
and with the omission of the words from " and the event in question " to "permanently discontinued" and from the beginning of the proviso to the end of the subsection:
Provided that where as respects any machinery or plant an event occurring after the commencement of this Act and falling within any of the paragraphs hereinbefore set out is followed by another event falling within any of those paragraphs, the later event shall not be treated as an event giving rise or which may give rise to a balancing allowance or balancing charge in respect of that machinery or plant.
(2)In paragraph (b) of subsection (2) of section two hundred and ninety-six of the Income Tax Act, 1952 (which paragraph provides that where obsolete machinery or plant provided before the appointed day is replaced, and the person replacing it has elected to be allowed a deduction in respect of the cost of replacement, no balancing allowance is to be made in respect of the sale, destruction or putting out of use of the machinery or plant replaced) the words " the sale, destruction or putting out of use of" shall cease to have effect.
2(1)Where an event occurs which gives rise or might give rise to a balancing allowance or balancing charge under the principal Chapter in respect of machinery or plant, the event is the permanent discontinuance of a trade, and at or about the time of the discontinuance there occurs in relation to the machinery or plant any event such as is mentioned in paragraphs (a) to (cc) of the definition of " sale, insurance, salvage or compensation moneys" in section three hundred and thirty-three of the Income Tax Act, 1952, not being a sale at less than the open-market price other than a sale to which section three hundred and twenty-seven of that Act applies, then for the purposes of determining—
(a)whether the discontinuance gives rise to a balancing allowance or balancing charge, and, if so,
(b)the amount of the allowance or, as the case may be, the amount on which the charge is to be made,
the amount of any net proceeds, compensation, receipts or insurance moneys mentioned in the said paragraphs (a) to (cc) which arise on the last-mentioned event shall be deemed to be an amount of sale, insurance, salvage or compensation moneys arising on the permanent discontinuance of the trade.
(2)In this and the three next following paragraphs the expression " open-market price ", in relation to any machinery or plant, means the price which the machinery or plant would have fetched if sold in the open market at the time of the event in question.
3(1)Subject to the provisions of paragraphs 4 and 6 of this Schedule, the next following sub-paragraph shall have effect where an event occurs which gives rise or might give rise to a balancing allowance or balancing charge under the principal Chapter in respect of machinery or plant, and either—
(a)the event is the permanent discontinuance of the trade and immediately after the time of the discontinuance the machinery or plant continues to belong to the person by whom the trade was carried on immediately before the said time and the case is one not falling within the last foregoing paragraph; or
(b)the event is the permanent discontinuance of the trade and at the time of the discontinuance the machinery or plant is either sold at less than the open-market price, the sale not being one to which section three hundred and twenty-seven of the Income Tax Act, 1952, applies, or the machinery or plant is given away; or
(c)the event is the sale of the machinery or plant at less than the open-market price, not being a sale to which the said section three hundred and twenty-seven applies, or is the gift of the machinery or plant; or
(d)the event is that, after the setting-up and before the permanent discontinuance of the trade, the machinery or plant permanently ceases to be used for the purposes of a trade carried on by the person by whom the first-mentioned trade is being carried on, and so ceases either by reason of that person's transferring the machinery or plant to other use or, on a transfer of the trade which is not treated as involving the discontinuance thereof, by reason of the retention of the machinery or plant by the transferor.
(2)For the purpose of determining whether a balancing allowance or balancing charge falls to be made and, if so, the amount of the allowance or, as the case may be, the amount on which the charge is to be made the event shall be treated as if it had given rise to sale, insurance, salvage or compensation moneys of an amount equal to the open-market price of the machinery or plant.
4(1)References in the two last foregoing paragraphs to the sale of machinery or plant at less than the open-market price do not include references to the sale thereof in such circumstances that there is a charge to tax under Schedule E by virtue of the provisions of Chapter II of Part VI of the Income Tax Act, 1952 (which relates to the taxation of benefits in kind provided for directors and employees).
(2)Sub-paragraph (2) of the last foregoing paragraph shall not apply by reason of a gift of machinery or plant if the machinery or plant is given away in such circumstances as aforesaid.
5Subject to the provisions of the next following paragraph, where sub-paragraph (2) of paragraph 3 of this Schedule has effect by reason of the gift or sale of machinery or plant to any person, and that person receives or purchases it with a view to using it for the purposes of a trade carried on by him, then in determining whether any, and if so what, annual allowances, balancing allowances or balancing charges are to be made in connection with that trade the like consequences shall ensue as if the recipient or purchaser had purchased the machinery or plant at the open-market price.
6(1)Where in a case falling within the last foregoing paragraph the recipient or purchaser and the donor or seller by notice in writing to the surveyor jointly so elect, the following provisions shall have effect.
(2)Sub-paragraph (2) of paragraph 3, and paragraph 5, of this Schedule shall have effect as if for the references to the open-market price there were substituted references to that price or the amount of the expenditure on the provision of the machinery or plant still unallowed immediately before the gift or sale, whichever is me lower.
(3)Notwithstanding anything in the foregoing provisions of this Schedule, such balancing charge under the principal Chapter, if toy, shall be made on the recipient or purchaser on any event occurring after the date of the gift or sale as would have fallen to be made on the donor or seller if the donor or seller had continued to own the machinery or plant and had done all such things and been allowed all such allowances in connection therewith as were done by or allowed to the recipient or purchaser.
7Where a person succeeds to a trade as a beneficiary under the will or on the intestacy of a deceased person who carried on that trade, the following provisions shall, if the beneficiary by notice in writing to the surveyor so elects, have effect in relation to any machinery or plant which passes to him together with the trade, being machinery or plant previously owned by the deceased person and used by him for the purposes thereof, that is to say:—
(a)the reference in subsection (1) of section three hundred and twenty-eight of the Income Tax Act, 1952, to the price which the machinery or plant would have fetched if sold in the open market shall, in relation to the succession and any previous succession occurring on or after the death of the deceased, be deemed to be a reference to that price or the amount of the expenditure on the provision of the machinery or plant still unallowed immediately before the succession in question, whichever is the lower; and
(b)notwithstanding anything in the said subsection (1), such balancing charge, if any, shall be made on the beneficiary on any event occurring after his succession as would have fallen to be made on the deceased if he had not died and had continued to own the machinery or plant and had done all such things and been allowed all such allowances in connection therewith as were done by or allowed to the beneficiary or the successor on any such previous succession as is mentioned in the last foregoing sub-paragraph.
8The definition of " sale, insurance, salvage or compensation moneys" in subsection (1) of section three hundred and thirty-three of the Income Tax Act, 1952 shall have effect for the purposes of the principal Chapter and of this Part of this Schedule as if at the end of paragraph (c) thereof the word " and " were omitted and after that paragraph there were inserted the following paragraph:—
as respects machinery or plant, where the event is the permanent loss thereof otherwise than in consequence of its demolition or destruction, any insurance moneys received by him in respect of the loss and any other compensation of any description received by him in respect thereof, in so far as that compensation consists of capital sums; and and as if in paragraph (d) the words " or that machinery or plant is put out of use " were omitted.”,
9Nothing in the foregoing provisions of this Schedule shall have effect where the event giving rise, or which might give rise, to a balancing allowance or balancing charge occurred before the commencement of this Act, and paragraph 7 of this Schedule shall not have effect if the latest of the successions therein referred to occurred before the commencement of this Act.
10(1)In charging the profits or gains of a trade carried on in partnership the same allowances, deductions and charges shall be allowed or made under the principal Chapter in respect of machinery or plant used for the purposes of that trade and belonging to one or more of the partners but not being partnership property as would fall to be allowed or made if the machinery or plant had at all material times belonged to all the partners and been partnership property and everything done by or to any of the partners in relation thereto had been done by or to all the partners.
(2)Notwithstanding anything in section two hundred and ninety-two of the Income Tax Act, 1952, a sale or gift of machinery or plant used for the purposes of a trade carried on in partnership, being a sale or gift by one or more of the partners to one or more of the partners, shall not be treated as an event giving rise to a balancing allowance or balancing charge under the principal Chapter if the machinery or plant continues to be used after the sale or gift for the purposes of that trade.
(3)References in the foregoing provisions of this paragraph to use for the purposes of a trade do not include references to use in pursuance of a letting by the partner or partners in question to the partnership or to use in consideration of the making to the partner or partners in question of any payment which may be deducted in computing the profits or gains of the trade.
11The provisions of the principal Chapter, of Chapter VI of Part X of the Income Tax Act, 1952, so far as it applies for the purposes of the principal Chapter, and of this Part of this Schedule, other than the provisions of this paragraph, shall apply in relation to a share in machinery or plant as they apply in relation to a part of machinery or plant, and for the purposes of the said provisions a share in machinery or plant shall be deemed to be used for the purposes of a trade so long as, and only so long as, the machinery or plant is used for the purposes thereof.
12(1)Where, after the setting up and on or before the permanent discontinuance of a trade which at any time is carried on in partnership, any event occurs which gives rise or may give rise to a balancing allowance or balancing charge under the principal Chapter in respect of machinery or plant, any balancing allowance or balancing charge which, if the trade had at all times been carried on by one and the same person, would have fallen to be made to or on him in respect of that machinery or plant by reason of that event shall be made to or on the person or persons carrying on the trade at the time of that event, and the amount of any such allowance or charge shall be computed as if that person or those persons had at all times been carrying on the trade and as if everything done to or by his or their predecessors in the carrying on thereof had been done to or by him or them:
Provided that in applying the provisions of subsection (4) of section two hundred and ninety-two of the Income Tax Act, 1952, to any such balancing charge, the deductions and allowances allowed or made in respect of the machinery or plant for years of assessment before the year 1946-47 shall not be taken to include deductions or allowances made to, or attributable to the shares of, persons who were not, either alone or in partnership with other persons, carrying on the trade at the beginning of that year.
(2)The foregoing sub-paragraph shall not have effect as respects events occurring before the commencement of this Act, and as respects other events shall have effect in substitution for subsection (2) of section three hundred and twenty-eight of the Income Tax Act, 1952, so far as that subsection applies to balancing allowances and balancing charges under the principal Chapter.
13The foregoing provisions of this Part of this Schedule shall, with any necessary adaptations, apply in relation to professions, employments, vocations and offices, and to the occupation of woodlands where the profits or gains thereof are assessable under Schedule D, as they apply in relation to trades.
14Subsection (3) of section three hundred and thirty-two of the Income Tax Act, 1952 (which relates to contributions to expenditure on the provision of assets), shall have effect as if for the words " or an initial allowance would have been made under Chapter II thereof " there were substituted the words " or an initial allowance or an annual allowance would have been made under Chapter II thereof ".
15In subsection (1) of section three hundred and twenty-eight of the Income Tax Act, 1952 (which relates to persons succeeding to trades which are to be treated as discontinued), the words from " except so much " to " two hundred and ninety-six of this Act", and in subsection (2) of that section (which relates to partnership trades which notwithstanding changes are not treated as discontinued) the proviso to that subsection, shall be omitted.
16(1)Expenditure incurred after the commencement of this Act in obtaining a right to acquire in the future patent rights as respects any invention in respect of which the patent has not yet been granted shall be deemed for all the purposes of Chapter V of Part X of the Income Tax Act, 1952, to be expenditure on the purchase of patent rights, and if the patent rights are subsequently acquired the expenditure shall be deemed for those purposes to have been expenditure on the purchase of those rights.
(2)Any sum received from a person which by virtue of this paragraph is deemed to be expenditure incurred by him on the purchase of patent rights shall be deemed to be proceeds of a sale of patent rights.
17Section three hundred and eighteen of the Income Tax Act, 1952 (which imposes a charge on capital sums received for the sale of patent rights), shall apply in relation to any sale after the commencement of this Act of part of any patent rights as it applies in relation to sales of patent rights.
18(1)Chapter VI of Part X of the Income Tax Act, 1952, shall apply for the purposes of this Schedule as it applies for the purposes of the said Part X.
(2)Expressions used in Part I of this Schedule have the same meanings as in Chapter II of the said Part X, and expressions used in Part II of this Schedule have the same meanings as in Chapter V of the said Part X.