Finance Act, 1942
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Provisions in respect of deficiencies of profits occurring in certain years of assessment. |
4.—(1) Where, for the year of assessment beginning on the 6th day of April, 1941, or any subsequent year of assessment for which excess sur-tax is chargeable, the profits to be included in the total income (computed as required for the purposes of sub-section (1) of section 5 of the Finance Act, 1941 (No. 14 of 1941), or that sub-section as applied to such year of assessment) of any individual from a trade or business are calculated by reference to a particular period (in this section referred to as the relevant period) of twelve months or of less than twelve months, any loss incurred by such individual in respect of the said trade or business which is required for the purposes of this section to be computed in respect of such year of assessment shall be calculated by reference to the same particular period and in the same manner as the said profits are calculated. | |
(2) A deficiency of profits in respect of a trade or business shall be deemed to have been incurred by an individual for a year of assessment where, for the relevant period in respect of that year, the profits of such person from the said trade or business are less than the standard profits of such individual from that trade or business or a loss has been incurred by such individual in the said trade or business or no such profits have been made and no such loss has been incurred by such individual. | ||
(3) Where, for any year of assessment, a deficiency of profits has been incurred by an individual in respect of a trade or business, the amount of such deficiency of profits shall, for the purposes of this section, be taken to be— | ||
(a) if for the said year the said individual has made profits from the said trade or business—the amount by which such profits fall short of the standard profits of the said individual from the said trade or business, or | ||
(b) if for the said year the said individual has incurred a loss in the said trade or business—the total of the amount of such loss and of the said standard profits of such individual, or | ||
(c) if for the said year the said individual has neither made profits from nor incurred a loss in the said trade or business—the amount of the said standard profits of the said individual. | ||
(4) The following provisions shall apply and have effect in respect of every deficiency of profits incurred by an individual in respect of a trade or business, that is to say:— | ||
(a) whenever, in any year of assessment for which excess sur-tax is chargeable, any such deficiency of profits is incurred by such individual, that deficiency of profits shall be applied in reducing, so far as it will extend, the excess of the profits of such individual from the said trade or business over his standard profits from that trade or business in the first year of assessment (whether past or future) for which excess sur-tax was or is chargeable and such excess occurred or occurs or, where the said deficiency of profits is equal to or greater than the said excess, in extinguishing the said excess, and in the later case so much (if any) of the said deficiency of profits as is not required for the purpose of so extinguishing such excess shall, in the next subsequent year of assessment for which excess sur-tax is chargeable and the profits of such individual from the said trade or business exceed his standard profits, be similarly applied in reducing or extinguishing the excess of those profits over the said standard profits, and so on until the said deficiency of profits is thereby exhausted; | ||
(b) whenever, in any year of assessment for which excess sur-tax is chargeable, any such deficiency of profits (in this paragraph referred to as the earlier deficiency) is incurred by such individual and, in a subsequent year of assessment for which excess sur-tax is chargeable, another deficiency of profits (in this paragraph referred to as the later deficiency) is incurred by such individual in respect of the same trade or business and, when the later deficiency is incurred, the earlier deficiency either has not been applied at all under the foregoing paragraph of this sub-section or (having been so applied) has not been exhausted by such application, the later deficiency shall be added (as the case may be) to the earlier deficiency or to so much of the earlier deficiency as remains after such application, and the amount produced by such addition shall be applied in accordance with the said foregoing paragraph as if it were a single deficiency of profits; | ||
(c) the next preceding paragraph of this sub-section shall apply, with the necessary modifications, whenever, in a case to which that paragraph applies, two or more deficiencies of profits are incurred by such individual in respect of the same trade or business before an earlier such deficiency of profits has been applied under paragraph (a) of this sub-section or before such earlier deficiency of profits (having been so applied) has been exhausted by such application; | ||
(d) in the determination, for the purposes of paragraph (a) of this sub-section, of the year of assessment which is the first year of assessment in which an excess of the profits of such individual from the said trade or business over his standard profits from that trade or business occurred or occurs, the following amounts shall be disregarded, that is to say, the amount of all (if any) profits of such individual from the said trade or business which, at any time before the making of such determination, have been extinguished under the foregoing provisions of this sub-section and all (if any) amounts by which profits of such individual from the said trade or business have, at any time before the making of such determination, been reduced under the said foregoing provisions. | ||
(5) Any relief to which an individual becomes entitled by virtue of this section shall be given by repayment or otherwise. | ||
(6) Such of the provisions in force for the purpose of sur-tax as relate to appeals shall apply and have effect, with the necessary modifications, in relation to the application of deficiencies of profits under this section (including the amount of any such deficiency of profits) in the like manner as they apply to assessments to sur-tax. |