Finance (Miscellaneous Provisions) Act, 1968

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PART IV

Profits or Gains from Dealing in or Developing Land: Income Tax and Sur-Tax

Interpretation.

16.—(1) In this Part, except where the context otherwise requires—

“company” includes any body corporate;

“control”, in relation to a company, means—

(a) 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 company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first-mentioned company are conducted in accordance with the wishes of that person, or

(b) the right of a person to more than one-half of any profits of the company distributed by way of dividend or, if the company were wound up, to more than one-half of its net assets;

“development” means, in relation to any land,—

(a) the construction, demolition, extension, alteration or reconstruction of any building on the land, or

(b) the carrying out of any engineering or other operation in, on, over or under the land to adapt it for materially altered use,

and “developing” and “developed” shall be construed correspondingly;

“market value” means, in relation to any property, the price which that property might reasonably be expected to fetch if sold in the open market;

“trading stock” has the same meaning as in section 62 of the Income Tax Act, 1967 ;

any reference to the disposal of an interest in land includes a reference to the creation of an interest and any reference to the acquisition of an interest in land includes a reference to the acquisition of an interest which ceases on the acquisition.

(2) For the purposes of this Part—

(a) a person shall not be regarded as disposing of an interest in land by reason of his conveying or transferring the interest by way of security or of his granting a lease of the land on terms which do not require the payment of any fine, premium or like sum, and

(b) an option or other right to acquire or dispose of any interest in any land shall be deemed to be an interest in the land.

(3) (a) Any question whether a person is connected with another shall for the purpose of this Part be determined in accordance with the following paragraphs of this subsection, any provision that one person is connected with another being taken as including provision that the other person is connected with the first-mentioned person.

(b) A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife.

(c) A person in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, and with any person who is connected with such an individual.

(d) A person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership.

(e) A company is connected with another company—

(i) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him have control of the other; or

(ii) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(f) A company is connected with another person, if that person has control of it or if that person and persons connected with him together have control of it.

(g) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(h) In this subsection—

“relative” means brother, sister, ancestor or lineal descendant;

“settlement” includes any disposition, trust, covenant, agreement, or arrangement, and any transfer of money or other property or of any right to money or other property;

“settlor”, in relation to a settlement, includes any person by whom the settlement was made or entered into directly or indirectly, and in particular (but without prejudice to the generality of the preceding words of this definition) includes any person who has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

(4) The provisions of this Part shall have effect notwithstanding anything in Schedule A or the provisions applicable to that Schedule or in Chapter VI of Part IV of the Income Tax Act, 1967 .