Finance Act, 1959
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Special provisions as to certain sales. |
62.—(1) The provisions of this section shall have effect in relation to sales of any property where either— | |
(a) the buyer is a body of persons over whom the seller has control, or the seller is a body of persons over whom the buyer has control, or both the seller and the buyer are bodies of persons and some other person has control over both of them, or | ||
(b) it appears with respect to the sale or with respect to transactions of which the sale is one, that the sole or main benefit which, apart from the provisions of this section, might have been expected to accrue to the parties or any of them was the obtaining of an allowance or deduction under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D, Part V of Finance Act, 1956 , or any of the provisions of this Part of this Act. | ||
References in this subsection to a body of persons include references to a partnership. | ||
(2) Where the property is sold at a price other than that which it would have fetched if sold in the open market, then, subject to the provisions of subsections (3) and (4) of this section, the like consequences shall ensue for the purposes of the enactments mentioned in subsection (1) of this section, in their application to the income tax of all persons concerned, as would have ensued if the property had been sold for the price which it would have fetched if sold in the open market. | ||
(3) Where the sale is a sale of machinery or plant— | ||
(a) no initial allowance shall be made to the buyer, and | ||
(b) subject to the provisions of subsection (4) of this section, if the price which the property would have fetched if sold in the open market is greater than the amount which, for the purpose of determining whether any, and if so, what, balancing charge should be made on the seller in respect of the property under Chapter II of this Part of this Act, would be taken to be the amount of the capital expenditure incurred by the seller on the provision of the property, subsection (2) of this section shall have effect as if for each of the references to the price which the property would have fetched if sold in the open market there were substituted a reference to the said amount: | ||
Provided that this subsection shall not apply in relation to a sale of machinery or plant which was never used if the business or part of the business of the seller was the manufacture or supply of machinery or plant of that class and the sale was effected in the ordinary course of the seller's business. | ||
(4) (a) Subject to subsection (5) of this section, where the sale is one to which paragraph (a) of subsection (1) of this section applies and paragraph (b) of that subsection does not apply, and the parties to the sale by notice in writing to the inspector of taxes so elect, the following provisions shall have effect: | ||
(i) subsection (2) of this section shall have effect as if, for each of the references to the price which the property would have fetched if sold in the open market, there were substituted a reference to that price or to the sum hereinafter mentioned, whichever is the lower, | ||
(ii) paragraph (b) of subsection (3) of this section shall not apply, and | ||
(iii) notwithstanding anything in the preceding provisions of this section, such balancing charge, if any, shall be made on the buyer on any event occurring after the date of the sale as would have fallen to be made on the seller if the seller had continued to own the property and had done all such things and been allowed all such allowances or deductions in connection therewith as were done by or allowed to the buyer. | ||
(b) The sum referred to in subparagraph (i) of paragraph (a) of this subsection is— | ||
(i) in the case of an industrial building or structure, the residue of the expenditure on the construction of that building or structure immediately before the sale, computed in accordance with the provisions of section 27 of this Act, | ||
(ii) in the case of machinery or plant, the amount of the expenditure on the provision thereof still unallowed immediately before the sale, computed in accordance with the provisions of section 36 of this Act, | ||
(iii) in the case of patent rights, the amount of the capital expenditure on the acquisition thereof remaining unallowed, computed in accordance with the provisions of section 48 of this Act. | ||
(5) An election under paragraph (a) of subsection (4) of this section may not be made if— | ||
(a) any of the parties to the sale is not resident in the State at the time of sale, and | ||
(b) the circumstances are not at that time such that an allowance or charge under this Part of this Act falls or might fall to be made to or on that party in consequence of the sale, | ||
but, except as aforesaid, this section shall have effect in relation to a sale notwithstanding that it is not fully applicable by reason of the non-residence of a party to the sale or otherwise. | ||
(6) In this section “control”, in relation to a body corporate, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership. |