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Treatment of premiums, etc., as rent.
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83.—(1) Where the payment of any premium is required under a lease, or otherwise under the terms subject to which a lease is granted, and the lease is a short lease, the lessor shall be treated for the purposes of section 81 as becoming entitled, when the lease is granted, to an amount by way of rent (in addition to any actual rent) equal to the amount of the premium reduced by one-fiftieth of that amount for each complete period of twelve months, other than the first, comprised in the term of the lease.
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(2) Where the terms subject to which a lease of any premises is granted impose on the lessee an obligation to carry out any work on the premises, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of an amount equal to the amount by which the value of the lessor's estate or interest, immediately after the commencement of the lease, falls short of what its then value would have been if the work had been carried out, but otherwise than at the expense of the lessee, and the rent were increased accordingly:
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Provided that this subsection shall not apply in so far as the obligation requires the carrying out of work payment for which would, if the lessor and not the lessee were obliged to carry it out, be deductible from the rent under section 81 (4).
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(3) Where, under the terms subject to which a lease is granted, a sum becomes payable by the lessee in lieu of the whole or a part of the rent for any period, or as consideration for the surrender of the lease, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum; but—
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(a) in computing tax chargeable by virtue of this subsection in respect of a sum payable in lieu of rent, the term of the lease shall be treated as not including any period other than that in relation to which the sum is payable;
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(b) notwithstanding anything in subsection (1), rent treated as arising by virtue of this subsection shall be deemed to become due when the sum in question becomes payable by the lessee.
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(4) Where, as consideration for the variation or waiver of any of the terms of a lease, a sum becomes payable by the lessee otherwise than by way of rent, the lease shall be deemed for the purposes of this section to have required the payment of a premium to the lessor (in addition to any other premium) of the amount of that sum; but in computing tax chargeable by virtue of this subsection the term of the lease shall be treated as not including any period which precedes the time at which the variation or waiver takes effect or falls after the time at which the variation or waiver ceases to have effect, and notwithstanding anything in subsection (1) rent treated as arising by virtue of this subsection shall be deemed to become due when the contract providing for the variation or waiver is entered into.
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(5) Where a payment such as is mentioned in subsection (1), (3) or (4) is due to a person other than the lessor, the said subsection (1), (3) or (4) shall not apply in relation to that payment, but any amount which would have fallen to be treated as rent if the payment had been due to the lessor shall be treated as an annual profit or gain of that other person and chargeable to tax under Case IV of Schedule D:
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Provided that where the amount relates to a payment falling within subsection (4), it shall not be so treated unless the payment is due to a person connected with the lessor.
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(6) (a) If an amount by reference to which a person is chargeable to tax by virtue of this section is payable by instalments, the following provisions shall, where this subsection applies, have effect in lieu of the foregoing provisions of this section:
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(i) each such instalment payable to the lessor for the time being shall be treated for the purposes of section 81 as if it were rent payable under the lease, and
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(ii) each such instalment payable to a person who is not a lessor shall be treated as an annual profit or gain of that person and chargeable to tax under Case IV of Schedule D.
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(b) This subsection applies where the person chargeable by virtue of this section by notice in writing, given to the inspector before the expiration of the year of assessment following that in which he becomes entitled to the first instalment, elects that it shall apply and where such notice of election is given all such additional assessments, alterations of assessments and repayments of tax shall be made as may be necessary.
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(7) For the purposes of this section any sum, other than rent, paid on or in connection with the granting of a lease shall be presumed to have been paid by way of premium except in so far as other sufficient consideration for the payment is shown to have been given.
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(8) Where the duration of a lease falls to be ascertained for the purposes of this section after a date on which the lease has for any reason come to an end, the duration shall, notwithstanding anything in section 80 (2), be taken to have extended from its commencement to that date; and where the duration falls to be ascertained for the said purposes at a time when the lease is subsisting, the provisions of section 80 (2) shall be applied in accordance with the circumstances obtaining at that time.
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