PART V.

Relief for certain Capital Expenditure: Income Tax, Sur-tax and Corporation Profits Tax.

Chapter I.

Industrial Buildings and Structures.

24. —(1) In this Chapter—

“industrial building allowance” means an allowance made under Part IV of Finance (Miscellaneous Provisions) Act, 1956 ;

“industrial building or structure” has the same meaning as, by virtue of section 17 of Finance (Miscellaneous Provisions) Act, 1956 , that expression has in Part IV of that Act.

(2) A person who has incurred expenditure on the construction of a building or structure shall be deemed, for the purposes of any provision of this Chapter referring to his interest therein at the time when the expenditure was incurred, to have had the same interest therein as he would have had if the construction thereof had been completed at that time.

(3) Without prejudice to any of the other provisions of this Part of this Act relating to the apportionment of sale, insurance, salvage or compensation moneys, the sum paid on the sale of the relevant interest in a building or structure, or any other sale, insurance, salvage or compensation moneys payable in respect of any building or structure, shall, for the purposes of this Chapter, be deemed to be reduced by an amount equal to so much thereof, as, on a just apportionment, is attributable to assets representing expenditure other than expenditure in respect of which an allowance can be made under Part IV of Finance (Miscellaneous Provisions) Act, 1956 , or under this Chapter.

(4) Section 19 of Finance (Miscellaneous Provisions) Act, 1956 , and subsection (3) of section 73 of this Act shall apply in relation to allowances and charges under this Chapter as they apply in relation to industrial building allowances for years of assessment beginning on or after the 6th day of April, 1959.

25. —(1) Subject to the provisions of this Part of this Act, where—

(a) any person is, at the end of his basis period for any year of assessment, entitled to an interest in a building or structure to which this section applies,

(b) at the end of the said basis period, the building or structure is an industrial building or structure, and

(e) that interest is the relevant interest in relation to the capital expenditure incurred on the construction of that building or structure,

an allowance (in this Chapter referred to as an annual allowance) equal to one-fiftieth of that expenditure shall be made to him for that year of assessment.

(2) A building or structure is one to which this section applies, if, and only if, the capital expenditure incurred on the construction of it has been incurred on or after the 30th day of September, 1956.

(3) Where, at any time on or after the 15th day of April, 1959, the interest in a building or structure which is the relevant interest in relation to any expenditure is sold while the building or structure is an industrial building or structure, the annual allowance in respect of that expenditure shall, in the case of years of assessment the basis periods for which end after the time of that sale,—

(a) be computed by reference to the residue (as defined in the provisions of this Chapter relating to the writing off of expenditure) of that expenditure immediately after the sale, and

(b) be the fraction of the said residue the numerator of which is one and the denominator of which is the number of years of assessment comprised in the period which—

(i) begins with the first year of assessment for which the buyer is entitled to an annual allowance in respect of the expenditure or would be so entitled if the building or structure had at all material times continued to be an industrial building or structure, and

(ii) ends with the fiftieth year of assessment after that in which the building or structure was first used,

and so on for any subsequent sales.

(4) Notwithstanding anything in the preceding provisions of this section—

(a) no annual allowance shall be made for a year of assessment beginning before the commencement of this Part of this Act, and

(b) in no case shall the amount of an annual allowance made to a person for any year of assessment in respect of any expenditure exceed what, apart from the writing off falling to be made by reason of the making of that allowance, would be the residue of that expenditure at the end of his basis period for that year of assessment.

26. —(1) Where any capital expenditure has been incurred, on or after the 30th day of September, 1956, on the construction of a building or structure, and, on or after the 15th day of April, 1959, any of the following events occurs while the building or structure is an industrial building or structure:

(a) the relevant interest in the building or structure is sold,

(b) that interest, being a leasehold interest, comes to an end otherwise than on the person entitled thereto acquiring the interest which is reversionary thereon,

(c) the building or structure is demolished or destroyed, or, without being demolished or destroyed, ceases altogether to be used,

an allowance or charge (in this Chapter referred to 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, the person entitled to the relevant interest immediately before that event occurs, for the year of assessment (being a year beginning on or after the commencement of this Part of this Act) in his basis period for which that event occurs:

Provided that no balancing allowance or balancing charge shall be made to or on any person for any year of assessment by reason of any event occurring after the end of his basis period for the fiftieth year of assessment after that in which the building or structure was first used.

(2) Where there are no sale, insurance, salvage or compensation moneys, or where the residue of the expenditure immediately before the event exceeds those moneys, a balancing allowance shall be made and the amount thereof shall be the amount of the said residue or, as the case may be, of the excess thereof over the said moneys.

(3) If the sale, insurance, salvage or compensation moneys exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made and the amount on which it is made shall be an amount equal to the excess, or, where the residue is nil, to the said moneys.

(4) If, for any of the relevant years of assessment (as defined for the purposes of this subsection) an annual allowance has not been made, subsections (2) and (3) of this section shall have effect subject to the modification that the amount of the balancing allowance, or, as the case may be, the amount on which the balancing charge is to be made, shall be reduced by applying thereto the fraction, the numerator of which is the number of the relevant years of assessment for which an annual allowance has been made in respect of the expenditure and the denominator of which is the total number of the relevant years of assessment.

In this subsection, “the relevant years of assessment” means all years of assessment after that in which the building or structure was first used for any purpose up to and including that in which the event takes place which gives rise to the allowance or charge:

Provided that where, before the said event but on or after the 15th day of April, 1959, the building or structure has been sold while an industrial building or structure, the said expression means all years of assessment for which either—

(a) an annual allowance is made by reason of the building or structure being an industrial building or structure at any time between the sale and the event, or, where there has been more than one such sale, between the last such sale and the event, or

(b) an annual allowance would have fallen to be made if the building or structure had been an industrial building or structure at all times between the sale, or, as the case may be, the last such sale, and the event.

(5) Notwithstanding anything in the preceding provisions of this section, in no case shall the amount on which a balancing charge is made on a person in respect of any expenditure on the construction of a building or structure exceed the amount of the industrial building allowance, if any, made to him in respect of that expenditure together with the amount of any annual allowances made to him in respect of that expenditure for years of assessment his basis periods for which end on or before the date of the event which gives rise to the charge.

27. —(1) Any expenditure incurred on the construction of any building or structure shall be treated for the purposes of this Chapter to be written off to the extent and as at the times hereafter specified in this section, and references in this Chapter to the residue of any such expenditure shall be construed accordingly.

(2) If an industrial building allowance is made in respect of the expenditure, the amount of that allowance shall be written off as at the time when the building or structure is first used.

(3) If, by reason of the building or structure being at any time an industrial building or structure, an annual allowance is made for any year of assessment in respect of the expenditure, the amount of that allowance shall be written off as at the said time;

Provided that where at the said time an event occurs which gives rise or may give rise to a balancing allowance or balancing charge, the amount directed to be written off by this subsection as at the said time shall be taken into account in computing the residue of that expenditure immediately before that event for the purpose of determining whether any and if so what balancing allowance or balancing charge is to be made.

(4) If, in the case of any year of assessment after that in which the building or structure is first used, no annual allowance falls to be made to any person in respect of the expenditure, then, subject to the provisions of this and the next succeeding subsection, an amount equal to one-fiftieth of the expenditure shall be treated as written off as at the end of the previous year of assessment;

Provided that—

(a) in the case of a year of assessment beginning on or after the commencement of this Part of this Act, this subsection shall not apply for any purpose if the building or structure was an industrial building or structure on the day preceding the beginning of the year of assessment, and

(b) where this subsection does apply in the ease of a year of assessment beginning as aforesaid, the amount to be written off shall, if the building or structure has been sold on or after the 15th day of April, 1959, while an industrial building or structure, be the amount which would have fallen to be written off if—

(i) the building or structure had been an industrial building or structure in use on the said preceding day for the purposes of a trade carried on by a person entitled to the relevant interest in the building or structure,

(ii) the basis period of that person for the year of assessment had ended on the said preceding day, and

(iii) an annual allowance had been made to him for the year of assessment accordingly.

(5) If, on the occasion of a sale, a balancing allowance is made in respect of the expenditure, there shall be written off as at the time of the sale the amount by which the residue of the expenditure before the sale exceeds the net proceeds of the sale.

(6) If, on the occasion of a sale, a balancing charge is made in respect of the expenditure, the residue of the expenditure shall be deemed for the purposes of this Chapter to be increased as at the time of the sale by the amount on which the charge is made.

28. —(1) Except in the cases mentioned in the following provisions of this section, any allowance or charge made to or on a person under the preceding provisions of this Chapter shall be made to or on him in charging the profits or gains of his trade.

(2) An annual allowance shall be made to a person for a year of assessment by way of discharge or repayment of tax if his interest is subject to any lease at the end of his basis period for that year of assessment.

(3) A balancing allowance shall be made to a person by way of discharge or repayment of tax if his interest is subject to any lease immediately before the event giving rise to the allowance.

(4) A balancing charge shall be made on a person under Case VI of Schedule D if his interest is subject to any lease immediately before the event giving rise to the charge.

(5) Any allowance which, under the preceding provisions of this section, is to be made by way of discharge or repayment of tax shall be available primarily against the following income:

(a) income charged to tax under Schedule A in respect of any premises which at any time in the year consist of or include an industrial building or structure,

(b) income charged to tax under Case III of Schedule D in respect of any rent payable for any such premises as aforesaid, or

(c) income which is the subject of a balancing charge under this Chapter.

29. —(1) Subject to the provisions of this section, in this Chapter “the relevant interest” means, in relation to any expenditure incurred on the construction of a building or structure, the interest in that building or structure to which the person who incurred the expenditure was entitled when he incurred it.

(2) Where, when he incurs expenditure on the construction of a building or structure, a person is entitled to two or more interests in the building or structure, and one of those interests is an interest which is reversionary on all the others, that interest shall be the relevant interest for the purposes of this Chapter.

(3) An interest shall not cease to be the relevant interest for the purposes of this Chapter by reason of the creation of any lease or other interest to which that interest is subject, and where the relevant interest is a leasehold interest and is extinguished by reason of the surrender thereof, or on the person entitled thereto acquiring the interest which is reversionary thereon, the interest into which that leasehold interest merges shall thereupon become the relevant interest.

30. —(1) Where, with the consent of the lessor, a lessee of any building or structure remains in possession thereof after the termination of the lease without a new lease being granted to him, that lease shall be deemed for the purposes of this Chapter to continue so long as he remains in possession as aforesaid.

(2) Where, on the termination of a lease, a new lease is granted to the lessee consequent upon his being entitled by statute to a new lease or in pursuance of an option available to him under the terms of the first lease, the provisions of this Chapter shall have effect as if the second lease were a continuation of the first lease.

(3) Where, on the termination of a lease, the lessor pays any sum to the lessee in respect of a building or structure comprised in the lease, the provisions of this Chapter shall have effect as if the lease had come to an end by reason of the surrender thereof in consideration of the payment.

31. —(1) For the purpose of this Chapter, a building or structure shall not be deemed to cease altogether to be used by reason that it falls temporarily out of use on or after the 15th day of April, 1959, and where, immediately before any period of temporary disuse beginning on or after that day, a building or structure is an industrial building or structure, it shall be deemed to continue to be an industrial building or structure during the period of temporary disuse.

(2) Notwithstanding any other provision of this Part of this Act as to the manner of making allowances and charges, where by reason of the provisions of subsection (1) of this section a building or structure is deemed to continue to be an industrial building or structure while temporarily out of use, then, if—

(a) upon the last occasion upon which the building or structure was in use as an industrial building or structure, it was in use for the purposes of a trade which has since been permanently discontinued, or

(b) upon the last occasion upon which the building or structure was in use as an industrial building or structure, the relevant interest therein was subject to a lease which has since come to an end,

any annual allowance or balancing allowance falling to be made to any person in respect of the building or structure during any period for which the temporary disuse continues after the discontinuance of the trade or the coming to an end of the lease shall be made by way of discharge or repayment of tax, and any balancing charge falling to be made on any person in respect of the building or structure during that period shall be made under Case VI of Schedule D.

(3) The reference in this section to the permanent discontinuance of a trade does not include a reference to the happening of any event which, by virtue of any provisions in Rule 11 of the Rules applicable to Cases I and II of Schedule D, is to be treated as equivalent to the discontinuance of the trade.

32. —(1) Subsection (1) of section 2 of the Finance Act, 1934 , is hereby amended by the deletion of “mills, factories, or other similar premises”and the substitution therefor of “industrial buildings or structures within the meaning of section 17 of Finance (Miscellaneous Provisions) Act, 1956 , as amended by section 73 of the Finance Act, 1959, and, in relation to any such industrial building or structure, the said Rules 7 and 8 shall have effect as if ‘one-third’ were substituted for ‘one-sixth ’ wherever it appears in the said rules ”.

(2) Rule 5 of the Rules applicable to Cases I and II of Schedule D is hereby amended by the deletion of the proviso to paragraph (2) and the insertion, after the said paragraph (2), of the following paragraph:

“(3) (a) Paragraph (2) of this rule shall not apply in the case of any premises which—

(i) is an industrial building or structure within the meaning of section 17 of Finance (Miscellaneous Provisions) Act, 1956 , as amended by section 73 of the Finance Act, 1959, but

(ii) is not a building or structure to which section 25 of the Finance Act, 1959, applies.

(b) Where, in the case of premises valued under the Valuation Acts as a unit, a part is, and a part is not, a building or structure to which setcion 25 of the Finance Act, 1959, applies, the annual value of each part shall be arrived at by apportionment of the rateable valuation of the premises, and paragraph (c) of subsection (3) and subsection (4) of section 2 of Finance Act, 1958 , shall apply to any such apportionment as they apply to an apportionment required by the said subsection (3).”

(3) Where an annual allowance in respect of a building or structure falls to be made in charging the profits or gains of a trade for any year of assessment and the basis period for that year of assessment falls wholly or partly before the commencement of this Part of this Act, then, for the purpose of determining the sum to be deducted on account of the annual value of the building or structure in estimating the profits or gains of the trade, the amount of the assessment of the building or structure for the purpose of tax under Schedule A shall be deemed to have been reduced for the purpose of collection as it would have been so reduced if this section had had effect for the whole of the basis period.

(4) Section 18 of the Finance Act, 1919, shall have effect as if—

(a) a reference to premises which—

(i) is an industrial building or structure, but

(ii) is not a building or structure to which section 25 of this Act applies,

were substituted for each of the references in subsections (1) and (2) to mills, factories or similar premises and for the reference in subsection (3) to mills, factories and similar premises, and

(b) a reference to one-third of the annual value were substituted for each of the references to one-sixth of the annual value.