Income Tax Act, 1967.

Meaning of “deficiency”.

325.—(1) For the purposes of this Chapter—

(a) a company has a deficiency in a trade for an accounting period if (but only if) the aggregate amount of—

(i) any loss sustained in the trade in the period (computed in like manner as profits or gains under the provisions, other than this Chapter, applicable to Case I of Schedule D),

(ii) any amounts referable to the period of capital allowances falling to be made in charging the profits or gains of the trade for any year of assessment of which the whole or a part is within the period, and

(iii) any payments to which section 433 or 434 applies (other than payments to which section 434 applies by virtue of section 288) being payments made wholly and exclusively for the purposes of the trade and not deductible in computing the profits or gains or losses of the trade,

exceeds the aggregate amount of—

(I) any profits or gains arising from the trade in the period (computed in accordance with the provisions, other than this Chapter, applicable to Case I of Schedule D), and

(II) any amounts referable to the period of balancing charges under Part XVI falling to be made in charging the profits or gains of the trade for any year of assessment of which the whole or a part is within the period, and

(b) if there is such an excess, the amount of the deficiency shall be taken as being equal to the amount of the excess.

(2) For the purposes of this section the amount of an allowance or charge referable to a period shall be taken to be the amount thereof to be taken into account in computing for the purposes of corporation profits tax the profits of the company for that period.