CO129-615-2 Income tax 10-3-1947 - 6-2-1948 — Page 172

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171

Initial and annual allowances, Machinery or Plant,

Balancing

allowances

and charges, Machinery or Plant

38. (1) Where, in or after the basis period for the year of assessment 1947/48 a person carrying on a trade, profession or business incurs capital expenditure on the provision of machinery or plant for the purposes of that trade, profession or business, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred an allowance, to be known as an "initial allowance" equal to one-fifth of that expenditure.

(2) Where at the end of the basis period for any year of assessment a person has in use machinery or plant for the purpose of his trade, profession or business there shall be made to him in respect of that year of assessment an allowance to be known as an "annual allowance" for depreciation by wear and tear of those assets. The allowance shall be calculated at the rates prescribed by the Board of Inland Revenue and shall be computed on the reducing value of the asset, which shall be the original cost of the asset reduced by- (i) any initial allowance granted in accordance with the provisions of this section; and

(ii) by the annual allowances made under the provisions of this section.

Provided that-

(i) where the asset was acquired before the basis period in respect of the year of assessment 1947/48 the value at the end of the basis period shall be computed by deducting from the amount paid for the asset by its present owner annual allowances as if this subsection had been in force during the whole period of ownership of the asset excluding any period during which the owner was deprived of the use of the asset by reason of enemy occupation.

(ii) the Commissioner may in his discretion allow a higher rate than that prescribed by the Board of Inland Revenue.

39. (1) Where, in or after the basis period for the year of assessment 1947/48, any of the following events occurs in the case of any machinery or plant in respect of which an initial allowance or an annual allowance has been made for any year of assessment to a person carrying on a trade, profession or business, that is to say, either-

(a) the machinery or plant is sold, whether while still in use or not; or

(b) the machinery or plant is destroyed; or

(c) the machinery or plant is put out of use as being worn out or obsolete or otherwise useless or no longer required, and the event in question occurs before the trade, profession or business is permanently discontinued, an allowance or charge, to be known as a "balancing allowance" or a "balancing charge," shall in the circumstances mentioned in this section, be made to or, as the case may be, on that person for the year of assessment in his basis period for which that event occurs.

(2) Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the plant or machinery still unallowed as at the time of the event

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