Income Tax Act, 1967.

Adjustment of assessments in certain cases.

326.—(1) Where under the foregoing provisions of this Chapter a deficiency payment, or part of a deficiency payment, made by a principal company falls to be treated as an expense of a trade incurred in an accounting period of which the whole or a part—

(a) falls within the company's basis periods for more than one year of assessment, or

(b) does not fall within the company's basis period for any year of assessment,

then, such adjustments, if any, shall be made—

(i) in a case within paragraph (a), of the assessment for any year mentioned in that paragraph other than the first, or

(ii) in a case within paragraph (b), of the assessment for the year next following the end of the said accounting period or, where the trade has been permanently discontinued before the beginning of that year, for the year in which the said accounting period ends,

as may be necessary to secure that, so far as may be, the aggregate of the amounts which, disregarding this Chapter, would be the final assessments on the company is reduced by an amount neither more nor less than the amount of the deficiency payment.

(2) For the purposes of this section a company's basis period for a year of assessment is the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question.