1940-HKRS28-8-1_Part01 — Page 33

Deductions not allowed.

(a) an allowance for reasonable depreciation.

(b) where any plant, machinery, or fixtures used in producing the profits of any trade or business have been sold or discarded without the said trade or business cessing, the loss attributable to the excess of the writton-down value over the sum, if any, realized or likely to be realized by the sale thereof.

Provided that---

(i) any corresponding profit shall be treated as a receipt of the trade or business, and

(ii) where such plant, machinery or fixtures were only partly used or employed in such trade or business the deduc- tion or addition under this sub-section shall be proportionately reduced;

(c) any sum expended for the repair (but not renewal} of plant, machinery, or fixtures employed in producing the profits or for the renewal or repair of any premises, imple- ment, utensils, or article so employed:

Provided that any person may claim as regards his plant, machinery, or fixtures that the cost of renewal be deducted in place of the depreciation and loss mentioned in paragraphs (a) and (b) of this sub-section, and his claim shall be allowed on such conditions as the Commissioner may prescribe;

(d) such sum as the Commissioner in his discretion considers reasonable for bad debts incurred in any trade or business, which have become bad during the period of which the profits are being ascertained, and for doubtful debts to the extent that they are estimated to have become bad during the said period, notwithstanding that such bad or doubtful debts were due and payable prior to the commencement of the said period:

Provided that all suras recovered during the said period on account of amounts previously written off or allowed in respect of bad or doubtful debts shall for the purposes of this Ordinance be treated as receipts of the trade or business for that period,

(c) interest paid or payable for the purpose of producing the profits.

17-(1) For the purpose of ascertaining profits no deduction shall be allowed in respect of-

(a) domestic or private expenses, including the cost of travelling between residence and place of business;

(b) any disbursements or expenses not being money expended for the purpose of producing the profits;

(e) any expenditure of a capital nature or any loss of capital;

(d) the cost of any improvements;

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(e) any sum recoverable under an insurance or contract of indemnity;

(f) rent of, or expenses in connexion with, any premises or part of premises not occupied or used for the purpose of producing the profits;

(g) any tax paid or payable under this Chapter.

(2) In computing the profits or losses of a partnership, nothing shall be deducted for salaries or other remuneration of partners or for interest on partners' capital.

18-1) The profits derived from any trade, profession Basis for or business carried on in the Colony for each year of assess coraputing

profits. ment shall be the full amount of the profits which arose or accrued from transactions within the Colony of such trade, profession or business during the year preceding the year of assessment.

(2) Where the Commissioner is satisfied that the accounts of a trade, profession or business carried on or exercised in the Colony are usually made up to some day other than the thirty-first day of March, he may direct that the profits from that source be computed on the amount of the profits of the year ending on that day in the year preceding the year of assessment. Where, however, the profits of any trade, profession or business have been computed by refer ence to an account made up to a certain day, and no soccol is made up to the corresponding day in the year following, the profits from that source both of the year of assessment in which such failure occurs and of the two years of asses- ment following shall be computed on such basis as the Commissioner in his discretion thinks fit.

(3) Notwithstanding the provisions of section 45 a claim made under this section to an adjustment of any assessment by reference to the profits for any period other than the year preceding the year of assessment shall be entertained if it is made within the period of twelve months next succeeding that year of assessment. A claim so made shall be regarded as an appeal for the purposes of Chapter VII.

(4) Where in the case of any trade, profession or business it is necessary in order to arrive at the profits or losses of may year of assessment or other period to divide and apportion to specific periods the profits or losses for any period for which accounts have been made up, or to aggregate any such profits or losses or any apportioned parts thereof, it shall be lawful to make such a division and apportionment or aggre- gation, and any apportionment under this section shall be inade in proportion to the number of days in the respective period.

19-(1) For the purposes of this section-

Liability of certain

(a) a person is closely connected with another person non-resident where the Commissioner in lus discretion considers that such persons. persons are substantially identical or that the ultimate con- trolling interest of each is owned or deemed under this section

to be owned by the same person or persons:

(b) the controlling interest of a company shall be deemed

to be owned by the beneficial owners of its shares, whether