163 of 1930)
Dalancing
KOSO
und Charge Under the
section 37A applies passes into the ownership of the person carrying on a trade, profession or business who incurred the capital expenditure under the hire purchase agreement, The reducing value of such machinery or plant computed in accordance with that section shall be included in the class- of machinery or plant for the purposes of section 398 for the years of assessment following the year of assessment during the basis period for which the machinery or plant passed into the ownership of that person.
(3) Where any machinery or plant which is included in a class of machinery or plant for the purposes of section 398 and which was used wholly and exclusively in the production of profits chargeable to lax under Part IV is subsequently not so used wholly and exclusively in the production of such profits, the provisions of This Part which applied immediately prior to the commencement of the Inland Revenue (Amendment) (No. 4) Ordinance 1980 shall apply to such machinery or plant in respect of the year of assessment during the basis period for which the machinery or plant is subsequently not used wholly and exclusively in the production of profits chargeable lo"tax under Part IV, and the reducing value of such machinery or plant shall be deemed to be such an amount as the Commissioner may consider it would have realized had it been sold in the open market at the time it ceased to be used wholly and exclusively in the production of such profits, and such reducing value shall be excluded from the total reducing value of that class of machinery or plant,
(4) For the purposes of subsection (2), in the applica- tion of section 37A, subsection (2) of that section shall be read as if "during the basis period" was substituted for "at the end of the basis period".
390. (1) Where at the end of a basis period for a year of assessment the aggregate reductions made under section 398(4) in respect of a class of machinery or plant exceed pouliotem the aggregate capital expenditure incurred by a person on the provision of machinery or plant belonging to that class- (a) a charge, to be known as a "balancing charge", shall be made on him, and the amount on which
it is made shall be an amount equal to the excess: and
(b) the reducing value at the end of the basis period
for that year of assessment shall be nil.
(2) Subject to subsection (3) and except where subsec- tion (4) applies, where a person ceases to carry on his trade, profession or business in a year of assessment, the appregate of the sale, insurance, salvage or compensation moneys, if any, of the machinery or plant in respect of which an initial allowance or annual allowance has been made shall be compared with the amount of the reducing value of the class of machinery or plant at the end of the basis period for that year of assessment and-
(a) where there are no sale, insurance, salvage or com
pensation moneys, or where the amount of the reducing value exceeds the aggregate of such moneys, an allowance, to be known as a "balancing allowance", shall be made to him, and the amount
5
thereof shall be the amount of the reducing value or, as the case may be, the excess thereof over the aggregate of the said monėjs; or
(6) where there are sale, insurance, salvage or com- pensation moneys, and the aggregate of such moneys exceeds the amount, if any, of the reducing value. a charge, to be known as a "balancing charge", shall be made on him, and the amount on which it is made shall be an amount equal to the excess or, where the reducing value is nil, to the aggregate of the said moneys.
(3) Subsection (2) shall not apply on the occasion on which any machinery or plant, to which section 393(7) applies, passes by way of succession.
(4) Where by reason of a person ceasing to carry on his trade, profession or business machinery or plant in respect of which an initial allowance or annual allowance has been made is put out of use and there are no sale, insurance, salvage or compensation moneys, such person shall, subject to subsection (5), be deemed to have received immediately prior to such cessation, sale moneys for such machinery or plant of such an amount as the Commissioner may consider it would have realized had it been sold in the open market at the time of cessation.
(3) If a person sells any machinery or plant referred to in subsection (4) within 12 months of the dale of cessation he may claim the adjustment of any balancing allowance or balancing charge which may have been made to or co him as if such sale had taken place immediately prior to the date of cessation and notwithstanding section 70 an asgestor shall make any necessary correction to any assZEL- megt.
(6) Notwithstanding anything contained in this section, where the aggregate of any sale, insurance, salvage or compensation moneys in respect of any machinery or plant exceeds the capital expenditure incurred on the provision of that machinery or plant, the aggregate of such moneys shall-
(a)
for the purposes of calculating a balancing charge under subsection (2X); and
(6) in calculating the reducing value of the class of
machinery or plant under section 398(4),
not exceed the capital expenditure incurred on the provision of that machinery or plant.
(7) For the purposes of subsection (6), the capital expenditure of the machinery or plant shall be taken as-
(a) in a case where section 37(3A) applies, the "cost of the asket" computed in accordance with that section:
(b) in a case where section 398(6) applies. the capital expenditure computed in accordance with tbal section; or
(c) in any other case, the aggregate capital expenditure incurred by the person in question on the pro-
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