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23 1971

FINANCE ACT, 1971

PART I

Income Tax

Income tax and sur-tax for the year 1971-72.

1. —(1) Income tax shall be charged for the year beginning on the 6th day of April, 1971, at the rate of 35 per cent.

(2) Sur-tax for the year beginning on the 6th day of April, 1971, shall be charged in respect of the income of any individual the total of which from all sources exceeds the aggregate of—

(a) £2,500, and

(b) the amount of any deductions to which the individual is entitled for that year under section 523 of the Income Tax Act, 1967 ,

and shall be so charged in respect of the excess at the following rates, that is to say:

for every pound of the first £2,000 of the excess

15 per cent.

for every pound of the next £2,000 of the excess

30 per cent.

for every pound of the remainder of the excess

45 per cent.

Cesser of section 2 of Finance Act, 1970.

2. Section 2 of the Finance Act, 1970 , shall not apply or have effect in relation to the year 1971-72 or any subsequent year of assessment.

Amendment of section 58 of Income Tax Act, 1967.

3. —In relation to a trade or profession which is permanently discontinued in the year 1972-73 or any subsequent year of assessment, section 58 of the Income Tax Act, 1967 , shall have effect as if the following subparagraphs were substituted for subparagraph (ii) of subsection (5) (a) of the said section 58:

“(ii) if the aggregate of the profits or gains (if any) of the years ending on the 5th day of April in each of the two years preceding the year of assessment in which the discontinuance occurs exceeds the aggregate of the amounts on which the person has been charged for each of the said two preceding years, or the aggregate of the amounts on which he would have been so charged if no such deduction or set-off as aforesaid had been allowed, he shall be charged instead, for each of the two said preceding years, but subject to any such deduction or set-off, on the amount of the profits or gains of the year ending on the 5th day of April in that year;

(iii) where a person has been charged with tax otherwise than in accordance with subparagraph (ii), any tax overpaid shall be repaid, or an additional assessment may be made upon him, as the case may require.”.

Charge of tax on sums applied outside the State in repaying certain loans.

4. — (1) For the purposes of section 76 (3) of the Income Tax Act, 1967 , any income arising from securities and possessions in any place outside the State which is applied outside the State by a person ordinarily resident in the State in or towards satisfaction of—

(a) any debt for money lent to him in the State or for interest on money so lent, or

(b) any debt for money lent to him outside the State and received in or brought to the State, or

(c) any debt incurred for satisfying in whole or in part a debt falling within paragraph (a) or (b),

shall be treated as received by him in the State and as so received from remittances payable in the State.

(2) Where a person ordinarily resident in the State receives in or brings to the State money lent to him outside the State, but the debt for that money is wholly or partly satisfied before he does so, subsection (1) shall apply as if the money had been received in or brought to the State before the debt was so satisfied, except that any sums treated by virtue of that subsection as received in the State shall be treated as so received at the time when the money so lent is actually received in or brought to the State.

(3) Where a person is indebted for money lent to him, income applied by him in such a way that the money or property representing the income is held by the lender on behalf of or to the account of the said person in such circumstances as to be available to the lender for the purpose of satisfying or reducing the debt by set-off or otherwise shall be treated as applied by the said person in or towards its satisfaction if, under any arrangement between the said person and the lender, the amount for the time being of the said person's indebtedness to the lender, or the time at which it is to be repaid in whole or in part, depends in any respect directly or indirectly on the amount or value held by the lender as aforesaid.

(4) For the purposes of this section—

(a) a debt for money lent shall, to the extent to which that money is applied in or towards satisfying another debt, be deemed to be a debt incurred for satisfying that other debt, and a debt incurred for satisfying in whole or in part a debt falling within paragraph (c) of subsection (1) shall itself be treated as falling within that paragraph, and

(b) “lender” includes, in relation to any money lent, any person for the time being entitled to repayment.

(5) This section shall not have effect in relation to income applied in or towards satisfaction of a debt for money lent before the 28th day of April, 1971, or of a debt incurred for satisfying in whole or in part any such debt, unless it is so applied after the end of the year 1971-72.

Allowance of cost of registration of trade marks as a deduction.

5. —Notwithstanding anything in section 61 of the Income Tax Act, 1967 , in computing the amount of the profits or gains of any trade, there shall be allowed to be deducted as expenses any feespaid or expenses incurred in obtaining, for the purposes of the trade, the registration of a trade mark or the renewal of registration of a trade mark.

Amendment of section 134 of Income Tax Act, 1967.

6. Section 134 of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution in paragraph (a) of the proviso (inserted by the Finance Act, 1970 ) of “£250” for “£225”, and

(b) by the substitution in paragraph (b) of the said proviso of “£150” for “£125”.

Amendment of section 135 of Income Tax Act, 1967.

7. Section 135 of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution in paragraph (d) of the proviso (inserted by the Finance Act, 1970 ) to subsection (1) of “£600” for “£500”, in both places where it occurs, and of “£150” for “£125”; and

(b) by the substitution in paragraph (e) of the said proviso of “£1,000” for “£900”, in both places where it occurs, and of “£250” for “£225”, in both places where it occurs.

Amendment of section 136 of Income Tax Act, 1967.

8. Section 136 of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution of “£600” for “£500” (inserted by the Finance Act, 1970 ) in each place where it occurs, and

(b) by the substitution in the proviso (inserted by the said Finance Act, 1970 ) to subsection (2) of “£150” for “£125”.

Amendment of section 139 of Income Tax Act, 1967.

9. Section 139 of the Income Tax Act, 1967 , is hereby amended by the insertion after subsection (5) (inserted by the Finance Act, 1967) of the following new subsection:

“(6) This section shall also apply to a claimant being an unmarried woman who throughout the year of assessment is in full-time employment or engaged full-time in some trade or profession as it applies to a claimant being a widower, save that ‘or of his deceased wife’ shall be omitted in both places where the expression occurs in subsection (1).”.

Amendment of section 142 of Income Tax Act, 1967.

10. Section 142 (1) of the Income Tax Act, 1967 , is hereby amended by the substitution of “£303” for “£282” in both places where it occurs and by the substitution of “£243” for “£222”.

Relief for blind persons.

11. —(1) In this section “blind person” means a person whose central visual acuity does not exceed 6/60 in the better eye with correcting lenses, or whose central visual acuity exceeds 6/60 in the better eye or in both eyes but is accompanied by a limitation in the fields of vision that is such that the widest diameter of the visual field subtends an angle no greater than 20 degrees.

(2) Subject to the provisions of this section, an individual who, in the manner prescribed by the Income Tax Acts, makes a claim in that behalf, makes a return in the prescribed form of his total income, and proves—

(a) that he is a married man who for the year of assessment has his wife living with him and that one of them was, for the whole or any part of the year, and the other was, at no time during the year, a blind person, or

(b) that, not being such a married man, he was for the whole or any part of the year, a blind person,

shall, in computing the amount of his taxable income, be entitled to have a deduction of £100 made from his assessable income.

(3) Subject to the provisions of this section, an individual who, in the manner prescribed by the Income Tax Acts, makes a claim in that behalf, makes a return in the prescribed form of his total income, and proves—

(a) that he is a married man who for the year of assessment has his wife living with him, and

(b) that each of them was, for the whole or any part of the year, a blind person,

shall, in computing the amount of his taxable income, be entitled to have a deduction of £200 made from his assessable income.

(4) All such provisions of the Income Tax Acts as apply in relation to every deduction specified in sections 138 to 143 of the Income Tax Act, 1967 , shall apply in relation to a deduction under this section.

(5) Section 153 (1) (d) of the Income Tax Act, 1967 , is hereby amended by the insertion after “1969,” of “and section 11 of the Finance Act, 1971”.

(6) Section 193 of the Income Tax Act, 1967 , is hereby amended by the addition at the end of subsection (6) of “or under section 11 of the Finance Act, 1971”.

(7) Section 497 of the Income Tax Act, 1967 , is hereby amended by the insertion after “1969,” of “or under section 11 of the Finance Act, 1971,”.

(8) Section 523 of the Income Tax Act, 1967 , is hereby amended by the substitution in subsection (1) (a) of “and 142, section 3 of the Finance Act, 1969 , and section 11 of the Finance Act, 1971” for “, 142 and section 3 of the Finance Act, 1969 ”.

Amendment of section 224 of Income Tax Act, 1967.

12. Section 224 of the Income Tax Act, 1967 , is hereby amended—

(a) by the substitution in subsection (2) of “, retirement pension, old age (contributory) pension and death grant” for “and old age (contributory) pension”,

(b) by the insertion after paragraph (b) of the proviso to subsection (3) of the following paragraph—

“(bb) no deduction or set-off shall be allowed in respect of so much of any contribution paid by a person whose entry into insurance for the purpose of retirement pension occurred after he had attained the age of fifty-five as was paid in respect of retirement pension;”, and

(c) by the insertion in subsection (4) before “shall” of “, other than death grant,”.

Amendment of section 251 of Income Tax Act, 1967.

13. Section 251 of the Income Tax Act, 1967 , is hereby amended by the substitution in subsection (4) (c) (inserted by the Finance Act, 1968 ) of “the 1st day of April, 1973” for “the 1st day of April, 1971.”

Amendment of section 254 of Income Tax Act, 1967.

14. Section 254 (2) of the Income Tax Act, 1967 , is hereby amended by the substitution of “the 1st day of April, 1973” for “the 1st day of April, 1971” (inserted by the Finance Act, 1968 ).

Amendment of section 336 of Income Tax Act, 1967.

15. Section 336 of the Income Tax Act, 1967 , is hereby amended by the substitution of “£350” for “£250.”

Amendment of sections 443 and 444 of Income Tax Act, 1967.

16. —(1) In relation to a payment to which this section applies—

(a) subsection (1) of section 443 of the Income Tax Act, 1967 , is hereby amended—

(i) by the deletion of “or payable or accumulated”,

(ii) by the substitution of “at the time of payment” for “at the beginning of such year”, and

(iii) by the addition of the following proviso:

“Provided that—d

(a) for the purposes of this Chapter, but subject to section 444, income which, by virtue or in consequence of a settlement to which this Chapter applies, is so dealt with that it, or assets representing it, will or may become payable or applicable to or for the benefit of a child of the settlor in the future (whether on the fulfilment of a condition, or on the happening of a contingency, or as the result of the exercise of a power or discretion conferred on any person, or otherwise) shall be deemed to be paid to or for the benefit of that child, and

(b) any income dealt with as aforesaid which is not required by the settlement to be allocated, at the time when it is so dealt with, to any particular child or children of the settlor shall be deemed to be paid in equal shares to or for the benefit of each of the children to or for the benefit of whom or any of whom the income or assets representing it will or may become payable or applicable”;

(b) subsection (4) of the said section 443 is hereby amended—

(i) by the deletion of “or payable or accumulated”, and

(ii) by the deletion in paragraph (a) of “, payable, or accumulated”;

(c) section 444 of the Income Tax Act, 1967 , is hereby amended—

(i) by the deletion in paragraph (a) of “(being a child who, at the beginning of such year, is under the age of twenty-one years and is unmarried)”, and

(ii) by the substitution in paragraph (b) of “at the time of payment” for “at the beginning of such year”.

(2) The reference in paragraph (b) of the said section 444 to another sum paid to or for the benefit of a child who, at the beginning of the year of assessment in which it was paid, was under the age of twenty-one years and unmarried, shall be construed, in relation to a payment to which this section applies of any such sum, as a reference to a sum so paid to or for the benefit of a child who at the time of payment was under the age of twenty-one years and unmarried.

(3) This section applies to any payment made after the year 1970-71, except a payment made in the year 1971-72, to or for the benefit of a child born after the 6th day of April, 1971, and so made by virtue or in consequence of a settlement made before the 28th day of April, 1971.

Amendment of section 550 of Income Tax Act, 1967.

17. —(1) In relation to interest chargeable for any month commencing on or after the date of the passing of this Act or any part of such a month on tax due and payable whether before, on or after such date, section 550 (1) of the Income Tax Act, 1967 , is hereby amended by the substitution of “.75 per cent.” for “one half per cent.”.

(2) (a) Section 550 of the Income Tax Act, 1967 , is hereby further amended—

(i) by the addition to subsection (1) of the following proviso:

“Provided that any tax charged by any assessment to income tax or to sur-tax shall, notwithstanding any appeal against such assessment, carry interest at the rate of .75 per cent. for each month or part of a month from the date when, if there were no appeal against the assessment, the tax would become due and payable under section 477 or section 522 (2) of the Income Tax Act, 1967 , as the case may be, until payment”;

(ii) by the substitution in subsection (2) of “two months” for “three months”; and

(iii) by the insertion after subsection (2) of the following subsection:

“(2A) (a) Where notice of appeal has been given against an assessment and an agreement as to the amount of tax which should be paid notwithstanding the appeal has been reached between the appellant and the inspector or other officer of the R Commissioners concerned under section 419 (1) and the amount so agreed has been paid within the period referred to in subsection (2), subsection (1) shall not apply to any balance of tax chargeable in accordance with the determination of the appeal if such balance is paid within two months from the date of determination of the appeal.

(b) Where notice of appeal has been given against an assessment and, in the absence of such an agreement as is referred to in paragraph (a), an appellant pays within the period referred to in subsection (2) a sum on account of the tax charged by the assessment under appeal and such sum is not less than 80 per cent. of the amount of tax found to be chargeable by the assessment on the determination of the appeal, subsection (1) shall not apply to any balance of tax chargeable in accordance with the determination if such balance is paid within two months from the date of the determination of the appeal.

(c) In this subsection ‘determination of the appeal’ means a determination by the Appeal Commissioners under section 416 (4) and includes an agreement referred to in section 416 (3) and an assessment becoming final and conclusive by virtue of section 416 (6).”.

(b) Paragraph (a) of this subsection shall not apply in relation to assessments to income tax or sur-tax charged by any assessment made before the date of the passing of this Act.

(3) Sections 418 and 529 of the Income Tax Act, 1967 , shall not apply in relation to assessments to income tax or sur-tax, as the case may be, made on or after the date of the passing of this Act.

Amendment of section 419 of Income Tax Act, 1967.

18. —In relation to assessments made on or after the date of the passing of this Act, section 419 of the Income Tax Act, 1967 , is hereby amended—

(a) by the insertion in subsection (1) after “repaid” of “with interest at the rate provided by section 550 (1) from the date or dates of payment of the amount or amounts giving rise to the overpayment to the date on which the repayment is made”, and

(b) by the addition to subsection (1) of the following proviso:

“Provided that—

(a) interest shall not be payable under this subsection if it amounts to less than £1, and

(b) income tax shall not be deductible on payment of interest under this section and such interest shall not be reckoned in computing income for the purposes of the Income Tax Acts”, and

(c) by the insertion after subsection (1) of the following subsection:

“(1A) Where, in a case in which notice of appeal has been given against an assessment to income tax or sur-tax and in which there is no agreement of the kind referred to in subsection (1), the appellant pays an amount of tax on account of the tax charged by the assessment under appeal which is in excess of the tax found to be chargeable by the assessment on the determination of the appeal, the provisions of subsection (1) shall apply as if the overpayment of tax had arisen by reason of a payment made in accordance with an agreement of the kind aforesaid.”.

Amendment of sections 428 and 429 of Income Tax Act, 1967.

19. —(1) Section 429 of the Income Tax Act, 1967 , is hereby amended by the insertion after subsection (3) of the following subsections:

“(4) Notwithstanding that, in the case of an assessment made upon a person on or after the date of the passing of the Finance Act, 1971, the person has, pursuant to subsection (1), required his appeal to the Appeal Commissioners against the assessment to be reheard by a judge of the Circuit Court, tax shall be paid in accordance with the determination of the Appeal Commissioners:

Provided that if the amount of the assessment is altered by the determination of the judge, then—

(a) if too much tax has been paid, the amount or amounts overpaid shall, save where the interest amounts to lessthan £1, be repaid with interest at the rate provided by section 550 (1) from the date or dates of payment of the amount or amounts giving rise to the overpayment to the date on which the repayment is made; or

(b) if too little tax has been paid, any balance shall be payable but the provisions of section 550 (2A) shall apply as if the appeal were an appeal to the Appeal Commissioners and the determination of the appeal by the judge were a determination of the appeal by the Appeal Commissioners.

(5) Income tax shall not be deductible on payment of such interest as is referred to in subsection (4) (a) and such interest shall not be reckoned in computing income for the purposes of the Income Tax Acts.”.

(2) Section 428 (9) of the Income Tax Act, 1967 , is hereby amended by the deletion of “or the Circuit Court as the case may be”.

Interest on income tax and sur-tax in cases of fraud or neglect.

20. —(1) In this section “neglect” has the same meaning as in section 186 (2) (d) of the Income Tax Act, 1967 .

(2) Where, for any year of assessment, an assessment is made for the purpose of recovering an undercharge to income tax or sur-tax which is attributable to the fraud or neglect of any person, the amount of the tax undercharged shall carry interest at the rate of .75 per cent. for each month or part of a month from the date or dates on which the tax undercharged for that year would have been payable if it had been included in an assessment made before the 1st day of January in that year to the date of payment of the tax undercharged.

(3) Subject to subsection (6), subsections (1) and (2) of section 550 of the Income Tax Act, 1967 , shall not apply to tax carrying interest under this section.

(4) Subsections (3), (4) and (5) of section 550 and section 551 of the Income Tax Act, 1967 , shall apply to interest chargeable under this section as they apply to interest chargeable under the said section 550.

(5) This section shall not have effect in relation to tax charged for any year of assessment prior to the year 1971-72.

(6) Where an assessment of the kind referred to in subsection (2) is made—

(a) the inspector concerned shall give notice to the person assessed that the tax charged by the assessment will carry interest under this section,

(b) the person assessed may appeal against the assessment on the ground that interest should not be charged under this section, and the provisions of the Income Tax Acts relating to appeals against assessments shall apply and have effect in relation to the appeal as they apply in relation to those appeals with any necessary modifications, and

(c) if, on the appeal, it is determined that the tax charged by the assessment should not carry interest under this section, subsections (1) and (2) of section 550 of the Income Tax Act, 1967 , shall apply to that tax.

Amendment of section 17 of Finance Act, 1970.

21. — (1) (a) Section 17 of the Finance Act, 1970 , is hereby amended by the insertion in subsection (2) after paragraph (a) of the following paragraph:

“(aa) a local authority, housing association, housing trust or housing society, or”.

(b) This subsection shall be deemed to have come into operation on the 6th day of April, 1971, but nothing in this subsection shall impose an obligation or liability on a local authority, housing association, housing trust or housing society in relation to the deduction of tax or the payment of tax to the Collector in respect of any payment made by it before the passing of this Act unless a deduction from the payment, which if made after the passing of this Act would be a valid deduction of tax, was made by it before such passing.

(c) Where a payment of the kind specified in paragraph (b) is made on or after the 6th day of April, 1971, without a deduction of the kind therein specified, the inspector may, by notice in a form prescribed by the Revenue Commissioners, require the body that made the payment to furnish to him, within one month after the date on which the notice is given to the body, particulars of the payment.

(d) Schedule 15 to the Income Tax Act, 1967 , is hereby amended by the insertion in column (2) thereof of “section 21 (1) (c) of the Finance Act, 1971”.

(2) Section 17 of the Finance Act, 1970 , is hereby further amended by the insertion of the following subsections after subsection (6):

“(6A) Where an amount of tax which a person who is or is deemed to be a principal of the kind referred to in subsection (2) is liable under this section and any regulations under subsection (5) to pay to the Collector is not so paid, simple interest on the amount shall be paid by the person to the Collector and such interest shall be calculated from the date on which the amount became due for payment and at a rate of one per cent. for each month or part of a month during which the amount remains unpaid.

(6B) Subsection (6A) shall apply to tax recoverable from a person by virtue of a notice under Regulation 12 (1) of the Income Tax (Construction Contracts) Regulations, 1971 , as if the tax were tax which the person was liable under the said Regulations to remit for—

(a) the income tax month (within the meaning of the said Regulations) during which the period of fourteen days from the service of the notice expired, or

(b) if it is later than the month specified in paragraph (a) of this subsection, the income tax month (within the meaning of the said Regulations) in which the appeal (if any) provided for by Regulation 12 (2) of the said Regulations in relation to the tax was determined by agreement or otherwise.

(6C) The provisions of every enactment and of the Income Tax (Construction Contracts) Regulations, 1971 , which apply to the recovery of any amount of tax which a principal of the kind referred to in subsection (2) is liable under this section and the said Regulations to pay to the Collector shall apply to the recovery of any amount of interest payable on that tax as if the said amount of interest were a part of that tax.”.

(3) Interest shall not begin to run under this section from any date prior to the date of the passing of this Act.

Investment allowance for machinery and plant in designated areas.

22. —(1) In this section and in sections 24 and 25 “qualifying machinery or plant” means machinery or plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) which is provided for use in any designated area and which, at the time it is so provided, is unused and not secondhand;

designated area” has the same meaning as in the Industrial Development Act, 1969 .

(2) Where a person carrying on a trade or profession incurs, on or after the 1st day of April, 1971, and before the 1st day of April, 1973, capital expenditure on the provision of qualifying machinery or plant for the purposes of the trade or profession, there shall be made to him, for the year of assessment in the basis period for which the expenditure is incurred, an allowance (in this section and in the next three following sections referred to as an investment allowance) equal to one-fifth of the expenditure, and such allowance shall be made as a deduction in charging the profits or gains of the trade or profession.

(3) For the purposes of this section—

(a) the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable,

(b) expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority,

(c) any expenditure incurred for the purposes of a trade or profession by a person about to carry it on shall be treated as if it had been incurred by that person on the first day on which he does carry it on, and

(d) capital expenditure shall not include any expenditure which is allowed to be deducted in computing, for the purposes of income tax, the profits or gains of a trade or profession carried on by the person incurring the expenditure.

(4) Any claim by a person for an allowance under this section in charging the profits or gains of his trade or profession shall be included in the annual statement required to be delivered under the Income Tax Acts of the profits or gains thereof and shall be accompanied by a certificate signed by the claimant, which shall be deemed to form part of the claim, stating that the expenditure was incurred on the provision of qualifying machinery or plant and giving such particulars as show that the allowance falls to be made.

(5) The definition of “capital allowance” in sections 69 (1) and 218 of the Income Tax Act, 1967 , and section 20 (5) (a) of the Finance Act, 1970 , and the definition of “capital allowances” in sections 314 (2) and 317 (1) of the Income Tax Act, 1967 , are hereby amended by the addition in each case of “or section 22 of the Finance Act, 1971”.

“Basis period”.

23. —(1) In section 22 “basis period” has the meaning assigned to it by the following provisions of this section.

(2) In the case of a person to whom an investment allowance falls to be made under the said section 22, his basis period for any year of assessment shall be the period on the profits or gains of which income tax for that year falls to be finally computed under Case I or Case II of Schedule D in respect of the trade or profession in question or, where, by virtue of any provision of the Income Tax Acts, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period:

Provided that, in the case of any trade or profession—

(a) where two basis periods overlap, the period common to both shall be deemed for the purposes of this subsection to fall in the first basis period only;

(b) where there is an interval between the end of the basis period for one year of assessment and the basis period for the next year of assessment, then, unless the second-mentioned year of assessment is the year of the permanent discontinuance of the trade or profession, the interval shall be deemed to be part of the second basis period; and

(c) where there is an interval between the end of the basis period for the year of assessment preceding that in which the trade or profession is permanently discontinued and the basis period for the year in which it is permanently discontinued, the interval shall be deemed to form part of the first basis period.

(3) (a) Any reference in the proviso to subsection (2) to the permanent discontinuance of a trade or profession shall be construed as including a reference to the occurring of any event which, under any of the provisions of the Income Tax Acts, is to be treated as equivalent to the permanent discontinuance of a trade or profession.

(b) Any reference in the said proviso to the overlapping of two periods shall be construed as including a reference to the coincidence of two periods or to the inclusion of one period in another, and references to the period common to both of two periods shall be construed accordingly.

Provision relating to wear and tear.

24. —(1) For the purposes of ascertaining the amount of any deduction to be allowed to any person under section 241 (1) of the Income Tax Act, 1967 , as representing the diminished value by reason of wear and tear during the year of assessment of any qualifying machinery or plant, no account shall be taken of an investment allowance in determining the value of the qualifying machinery or plant at the commencement of the year.

(2) In section 241 (6) of the Income Tax Act, 1967 , “the deductions on that account, and”, and the expression “the deductions” where that expression occurs before “and allowances”, shall each be construed as not including a reference to any investment allowance made to the person by whom the trade or profession is carried on.

(3) Section 241 (3) of the Income Tax Act, 1967 , shall apply in relation to an investment allowance as it applies in relation to deductions allowable in respect of wear and tear of machinery or plant.

Withdrawal of investment allowance.

25. —Where an investment allowance has been made to any person in respect of expenditure incurred on the provision of qualifying machinery or plant and the machinery or plant is sold by him without the machinery or plant having been used by him in a designated area for the purposes of his trade or profession or before the expiration of the period of two years from the day on which the machinery or plant began to be so used, the investment allowance shall be withdrawn, and all such additional assessments and adjustments of assessments shall be made as may be necessary for or in consequence of the withdrawal of an investment allowance.

Increase of wear and tear allowances for certain machinery and plant.

26. —(1) In this section—

qualifying machinery or plant” means machinery or plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) which is provided for use on or after the 1st day of April, 1971, and before the 1st day of April, 1973, in any area other than a designated area for the purposes of a trade or profession and which, at the time it is so provided, is unused and not secondhand;

designated area” has the same meaning as in the Industrial Development Act, 1969 .

(2) Subject to the provisions of this section, where for any year of assessment a deduction falls to be allowed under section 241 of the Income Tax Act, 1967 , for wear and tear of any qualifying machinery or plant, the deduction shall, subject to subsection (6) of that section, be increased by such amount as is specified by the person to whomthe deduction is to be allowed in making his claim for the deduction; and, in relation to a case in which this subsection has had effect, any reference in the Income Tax Acts to a deduction allowed under the said section 241 shall be construed as a reference to that deduction as increased under this subsection.

(3) Subsection (2) shall not apply to qualifying machinery or plant which is let to a person on the terms mentioned in section 241 (2) of the Income Tax Act, 1967 , unless the contract of letting provides that the person shall or may become the owner of the machinery or plant on the performance of the contract; and where the contract so provides, but without becoming the owner of the machinery or plant, he ceases to be entitled (otherwise than on his death) to the benefit of the contract so far as it relates to the machinery or plant, subsection (2) shall be deemed not to have applied in relation to the machinery or plant and there shall be made accordingly all such additional assessments and adjustments of assessments as may be appropriate.

(4) Where for any year of assessment the deduction under section 241 of the Income Tax Act, 1967 , for wear and tear of any machinery or plant is increased under this section, no allowance under Chapter I of Part XV of the said Act shall be made in relation to the machinery or plant for that or any subsequent year of assessment.

(5) Section 14 (1) of the Finance Act, 1970 , is hereby amended by the addition to the definition of “wear and tear allowance” of “or section 26 of the Finance Act, 1971”.