Finance Act, 1963

Taxation of rents under short leases.

84.—(1) The profits or gains arising from any rent in respect of any premises under a short lease shall, to the extent provided for by this Part of this Act, be deemed, for all the purposes of the Income Tax Acts, to be annual profits or gains within Schedule D and the lessor shall be chargeable in respect thereof under Case VI of that Schedule.

(2) Notwithstanding anything in Rule 2 of the Rules applicable to the said Case VI, income tax in respect of profits or gains chargeable by virtue of this section shall in all cases be computed on the full amount of the profits or gains of the year of assessment.

(3) Subject to the subsequent provisions of this Part of this Act, the amount of the profits or gains to be charged under this section shall be arrived at by making from any rent to which the lessor becomes entitled in the year of assessment the deductions authorised by the next following subsection.

(4) The deductions authorised by this subsection are deductions by reference to any or all of the following matters:

(a) the amount, if any, on which the lessor is liable to pay, by deduction or otherwise, income tax under Schedule A for the year of assessment in respect of the premises;

(b) the excess, if any, of the amount of any rent payable by the lessor in respect of the premises, or in respect of a portion thereof, under a short lease over the amount referred to in the immediately preceding paragraph or, as the case may be, the portion of the latter amount which is referable to the portion of the premises in respect of which the rent is payable by the lessor;

(c) any sums borne by the lessor, in accordance with the conditions of the lease, in respect of county rate, municipal rate or other rate, whether such sums are by law charged upon him or upon the lessee;

(d) the cost to the lessor of any services rendered or goods provided by him, otherwise than by way of maintenance or repairs, being services or goods which he is legally bound under the lease to render or provide but in respect of which he receives no separate consideration;

(e) the cost of maintenance, repairs, insurance and management of the premises in so far as such cost is, by reason of obligations imposed by the lease, borne by the lessor,

and the amount of the deduction to be made by reference to each of the foregoing matters shall be the amount which would fall to be so made in computing profits or gains under the provisions applicable to Case I of Schedule D if it were enacted that the receipt of rent under a short lease should be deemed to be a trade carried on during the currency of the lease by the lessor for the time being and that the premises comprised in the lease should be deemed to be occupied for the purposes of that trade.

For the purposes of this subsection the currency of a lease shall be deemed to include a period, immediately following its termination, during which the lessor, immediately before the termination, was not in occupation of the premises or any part thereof, but was entitled to possession thereof, if at the end of that period the premises have become subject to another short lease granted by him.

(5) Where a lessor is entitled to rent in respect of premises (hereafter in this subsection referred to as the said premises) under a short lease and—

(a) the said premises do not comprise the whole of a unit of valuation or the whole of two or more such units, or

(b) a rent is payable by the lessor under a short lease in respect of premises which comprise the whole or a part of the said premises and other premises,

the inspector of taxes shall make, according to the best of his knowledge and judgment, any appropriate apportionment of rateable valuation or of rent payable by the lessor in determining the amount of any deduction under paragraph (a), (b) or (c) of the immediately preceding subsection.

(6) An apportionment made under subsection (5) of this section may be amended by the Special Commissioners, or by the Circuit Judge, on the hearing, or the re-hearing, of an appeal against an assessment made on the basis of such apportionment; but, on the hearing, or the re-hearing, of any such appeal, a certificate of the Commissioner of Valuation, tendered by either party to the appeal and certifying, as regards premises valued under the Valuation Acts as a unit, the amount of the rateable valuation of the premises attributable to any part of the premises, shall be conclusive as to the amount so attributable.