Finance Act, 1967

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Amendment of sections 254 (1) and 262 of Income Tax Act, 1967.

6.—(1) The following subsection is hereby substituted for section 254 (1) of the Income Tax Act, 1967 :

“(1) (a) Subject to the provisions of this Act, where a person incurs capital expenditure on the construction of a building or structure which is to be an industrial building or structure occupied for the purposes of a trade carried on either by him or by such a lessee as is mentioned in paragraph (b), there shall be made to the person who incurred the expenditure, for the appropriate year of assessment, an allowance (in this Chapter referred to as an industrial building allowance) equal to one-tenth thereof:

Provided that this paragraph shall not apply to any expenditure incurred before the 30th day of September, 1956.

(b) The lessee referred to in paragraph (a) is a lessee occupying the building or structure on the construction of which the expenditure was incurred under a lease to which the relevant interest is reversionary.

(c) In this subsection—

‘appropriate year of assessment’ means, in relation to any person who has incurred expenditure on the construction of a building or structure, the year of assessment in the basis period for which the expenditure was incurred or, in a case in which the first use to which the building or structure is put is a use by a person occupying it by virtue of a tenancy to which the relevant interest is reversionary and the tenancy begins after the incurring of the expenditure, the year of assessment in which the tenancy begins;

‘lease’ and ‘lessee’ have the same meanings as in Part XVI;

‘the relevant interest’ has the same meaning as in Chapter I of Part XVI.

(d) (i) Except in the case mentioned in subparagraph (ii), any industrial building allowance made to a person shall be made to him in charging the profits or gains of his trade.

(ii) An industrial building allowance shall be made to a person by discharge or repayment of tax if his interest in the building or structure is subject to any lease when the expenditure is incurred or becomes subject to any lease before the building or structure is first used for any purpose and, where it is so made, subsection (5) shall not apply.

(e) Section 267 (5) and section 296 shall have effect in relation to an industrial building allowance which is to be made by discharge or repayment of tax as they have effect in relation to an allowance under Chapter I of Part XVI which is to be so made.”

(2) The following subsection is hereby added to section 262 of the Income Tax Act, 1967 :

“(4) Nothing in subsection (2) or (3) applies in relation to an allowance under Chapter II falling to be made to a person by discharge or repayment of tax and, in relation to that allowance, his basis period for any year of assessment shall be the year of assessment itself.”