Income Tax Act (Cap. 123), article 24

24. (1) Where, under the provisions of article 14(1)( f) and (j), any deduction has been allowed in any year of assessment in ascertaining the total income of any person and any of the following events occurs in the y ear immediately preceding the y ear of assessment in the case of any property in respect of which a ny deduction has been allowed as af oresaid, that is to say, either the property or any part thereof - (a) is sold or otherwise transferred under an onerous title, whether still in use or not; or (b) is destroyed; or (c) is put out of use as being worn out or obsolete or otherwise useless or no longer required, Cap. 372. and the event in quest ion occurs before the source of income in respect of which the deduction has been allowed has ceased to e xist or to belong to the said person, he shall, in the year of asses sment, r e n d e r t o t h e C o m m i s s i o n e r , a t t h e s a m e t i m e a s h e r e n d e r s h i s return of income under article 10 of the Income Tax Management Act, a statement (hereinafter referred to as a "balancing statement"), in respect of the pr operty in question showing the following items, that is to say: (i) the amount of the capital expenditure on the provision thereof; and (ii) the total depreciation which has occurred by reason of wear and tear since the date of the acquisition of such proper ty, taking into account the aggregate amount of all deductions previously allowed under the provisions of article 14(1)( f) and (j) and of any deductions or charges previously allowed or made under sub- article (2)(a) or (b); (iii) the amount of all sale, insurance, salvage or compensation monies in respect thereof and, where the property has been transferred by exchange, the value thereof, or, if put out of use, the disposal value thereof. (2) In ascertaining the total income of a person who is required INCOME TAX [CAP. 123. 111 under sub-article (1) to render a balancing statement to the Commissioner, a deduction (hereinafter referred to as a "balanc ing allowance") shall be allowed or, as the case may be, an additio n (hereinafter referred to as a "b alancing charge") shall be made and such balancing allowance or balancing charge shall be calculate d by reference to the balancing sta tement or statements rendered by the person in respect of the year immediately preceding the yea r of assessment, as follows: (a) the amount of a balancing allowance shall be the amount by which the amount of item (i) of the balancing statement exceeds the sum of the amounts of item (ii) and item (iii) of that statement; or (b) the amount of the balancing charge shall be the amount by which the sum of the amounts of item (ii) and item (iii) of the balancing sta tement exceeds the amount of item (i) of tha t statement: Provided that - (i) the balancing charge shall in no case exceed the aggregate amount of any deductions previously allowed under the provisions of article 14(1)(f) and (j) and included in item (ii) of the balancing statement; (ii) where the property in respect of which a balancing allowance falls to be allowed or a balancing charge falls to be made was used only partly in the production of the income, only so much of the balancing allowance that would otherwise have been allowed, or of the balancing charge that would otherwise have been made shall be allowed or made as may be appropriate having regard to the extent of use for the said purpose. (3) Where property, in the case of which any of the events mentioned in sub-article (1) has occurred, is replaced by the o wner thereof and a balancing charge falls to be made on him by reaso n of that event or, but for the provisions of this sub-article, woul d have fallen to be made on him by reason thereof, then, if by notice in writing to the Commissioner he so elects, the following provisi ons shall have effect, that is to say: (a) if the amount of the balancing charge which would have been made is greater than the capital expenditure on providing the new property - (i) the balancing charge sh all be an amount equal to the difference; and (ii) no balancing allowance under sub-article (2) and no deduction under article 14(1)( f) and (j) shall be made or allowed in respect of such new property or the capital expenditure on the provision thereof; and (iii) in considering whether any, and, if so, what 112 CAP. 123.] INCOME TAX balancing charge falls to be made in respect of the capital expenditure on providing such new property, the aggregate amount of all deductions, previously allowed in respect of such property under the provisions of th is article and of article 14(1)( f) and (j), shall be deemed to be equal to the full amount of such expenditure; (b) if the capital expenditure on providing the new property is equal to, or gr eater than the amount of the balancing charge that would have been made - (i) the balancing charge shall not be made; and (ii) the amount of any deductions in respect of the said expenditure under the provisions of article 14(1)( f) and (j) shall be calculated as if the capital expenditure on providing such new property had been reduced by the amount of the balancing charge which would have been made; and (iii) in considering whether any, and, if so, what balancing allowance or balancing charge falls to be made in respect of the capital expenditure on providing such new property, the aggregate amount of all deductions, previously allowed in respect of such property under the provisions of this article and under article 14(1)( f) and (j), shall be deemed to have been increased by an amount equal to the amount of the balancing charge that would have been made: Provided that where the ne w property is only partly employed in the production of the income, only so much of the capital expenditure incurred in providing the property shall be taken into account for the purpose s of this sub-article as may be appropriate having regard to the extent to which such property is wholly and exclusively employed in the production of the income . (4) Where any person has deliver ed a balancing statement, the Commissioner may - (a) accept the statement and make a balancing allowance or balancing charge accordingly; or (b) refuse to accept the statemen t and, to the best of his judgment, determine the amount of the balancing allowance or balancing charge and make a balancing allowance or balanci ng charge accordingly. (5) Where a person has not deliv ered a balancing statement and the Commissioner is of the opinio n that a balancing charge woul d fall to be made upon such person in respect of any such propert y, then the Commissioner may, according to the best of his judgmen t, determine the amount of such balancing charge and assess him accordingly. INCOME TAX [CAP. 123. 113 Cap. 372. (6) Nothing in sub-article (4) and (5) contained shall prevent the decision of the Commissioner in the exercise of the power conferred upon him by those sub-articles from being questioned in an appeal in accordance with the p rovisions of articles 35 and 37 of the Income Tax Management Act . (7) For the purpose of this article - (a) the expression "property" means plant and machinery, and premises being an industrial building or structure owned and employed by any person in the production of his income; (b) the capital expenditure on providing any property shall be the amount which, in the opinion of the Commissioner, such property would have cost if bought in the open market at the time it was provided; (c) the price in respect of any property sold or the value of any property otherwise tra nsferred under an onerous title shall be the amount which, in the opinion of the Commissioner, such property would have fetched if sold or otherwise transferred under an onerous title on the open market at the time it was sold or transferred; (d) the disposal value in respect of any property which is put out of use shall be the amount which, in the opinion of the Commissioner, such property would have fetched if sold or otherwise transferred under an onerous title in the open market at the time it was put out of use. (8) Where in any year of assessm ent full effect cannot be given to any balancing allowance owing to there being no profits or g ains chargeable for that year from the source of income in respect o f which such allowance is claimed or owing to the profits or gain s chargeable from that source being less than the allowances, the n so long as the source of income in r espect of which the allowance falls to be made continues to exist and to belong to the person entit led to the said allowance, the balance of such allowance shall be adde d to, and be deemed to from part of, the allowance, if any, for the n ext succeeding year of assessment, and if no such allowance falls t o be made for that year, shall be deem ed to constitute the allowance for that year, and so on for su bsequent years of assessment. Applicability of articles 14 to 24. Added by: XVII. 1994.15. Substituted by: II. 2007.8.