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become irrecoverable:


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Provided that any amount recovered during the said year on
account of amounts previously written off or allowed in respect
of bad debts under the provisions of any previous law imposing
tax on income or under the provisions of this Law shall, for the
purposes of this Law, be treated as receipts of the business for
that year;

(d) any expenditure for scientific research incurred by a person
carrying on any business, so long as the Commissioner is
satisfied that such expenditure has been incurred for the use
and benefit of the business:

Provided that no deduction shall be allowed under the
provisions of this paragraph in the case of any such expenditure
on plant and machinery or buildings, including employees'
dwellings, in respect of which any deduction is allowable under
section 10 of this Law:

Provided further that any such expenditure of a capital nature
not qualifying for any deduction under section 10 shall be
spread equally over the year of assessment in which it has been
incurred and the five years next following;

(e) any expenditure on patents or patent rights or royalties
incurred by a person carrying on a business with regard to
which the Commissioner is satisfied that it has been incurred
for the benefit of the business:
Provided that any such expenditure of a capital nature shall be
spread over the life of the patent or patent rights in a
reasonable manner to the satisfaction of the Commissioner:

Provided further that any sums received or receivable from any
sales of such patents or patent rights or royalties or any part
thereof, as well as all royalties or other income received or
receivable in respect thereof shall be included in the chargeable
income;

(f) donations or contributions made for educational, cultural or




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other charitable purposes to the Republic or a Local Authority
or to any charitable institution therein approved as such by the
Council of Ministers:

Provided that, notwithstanding any provisions of this Law to
the contrary, in the event of a loss incurred in the year in which
such donation or contribution was made, any part of the loss up
to the amount of the donation or contribution shall not be
carried forward and shall not be set off against the income of
subsequent years;

(g) any expenditure incurred, irrespective of whether it had been
incurred for the acquisition of income or not,

(i) for the maintenance of a building in respect of which there
is in force a Preservation Order made under the Town and
90 of 1972 Country Planning Law, if the Minister of the Interior
56 of 1982
certifies that the expenditure has been incurred for the
7 of 1990
completion of maintenance works for such building;
28 of1991
91(π) of 1992
55(π) of1993
72(π) of1993
59(π) of1999
142(π) of1999.
(ii) for the maintenance, preservation or restoration of an
ancient monument specified in the Second Schedule to the
Cap.31
48 of 1964 Antiquities Law, if the Director of Antiquities certifies
32 of 1973 that the expenditure has been incurred for the completion
of the maintenance, preservation or restoration works for
that ancient monument:

Provided that no deduction under this paragraph shall be
allowed -

(i) to the extent to which the amount of expenditure exceeds
the sum of one hundred and eighty pounds per square
meter of the area of the building or ancient monument;

(ii) in respect of any amount which the owner of such building
or ancient monument has received under sub-section (2)


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of section 8 of the Antiquities Law or from any public
fund;

(h) interest up to an amount of five hundred pounds in connection
with a loan made for the construction of residence ordinarily
used by an individual or his children for the purpose of
residence:

Provided that this provision applies only for the year of
assessment 2003;

(i) any amount of interest in relation to the acquisition of business
assets used in the business;

(j) sums paid into a Fund approved under Regulations for
educational purposes and maintenance of an individual
attending any university, college, school or other educational
institution.

(2) In the case of income of an individual from the letting of
buildings an amount of twenty per cent (20%) is deducted from such
gross income before the deduction of the wear and tear allowance as
provided in section 10 and the expenditure for interest.

Deductions and 10. (1) In this section «property» means plant, machinery or
additions on buildings, including employees' dwellings, owned by a person
account of
carrying on a business or by an employee and used and employed
property used in
by such person in such business or used in employment, or in
business.
scientific research proved to the satisfaction of the Commissioner to
be for the benefit of such business or employment.

Provided that for the purposes of this sub-section a private motor
vehicle, shall not be deemed to be within the meaning of the term
«plant and machinery».

(2) In ascertaining the chargeable income of any person carrying
on business or employment, there shall be allowed, subject to the
provisions of sub-section (1) of this section, a deduction of a
reasonable amount for the exhaustion and wear and tear of property
arising out of its use and employment in the business or



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employment during the year of assessment:

Provided that the total of any such deductions shall not exceed the
capital expenditure incurred by such person in acquiring this
property:

Provided further that-

(i) no individual in employment shall be entitled to claim the
deduction under this section in respect of property owned by
him if he is not expressly required by the terms of his
employment to use such property in the performance of his
duties or if he is paid any compensation or other allowance in
respect of such use;

(ii) if property is used and employed partly for business and partly
for private purposes, the Commissioner shall determine what
part of the capital expenditure incurred in acquiring the
property is applicable to the private use of the property and,
thereupon, the deductions aforesaid shall be allowed in respect
of that part of the capital expenditure which is applicable to the
use of the property in the business or employment;

(iii) for the purposes of this section, the length of life of a building,
other than an industrial or hotel building, shall be fixed at thirty
three years and that of an industrial or hotel building at twenty
five years, and in the event of the building being transferred by
sale or otherwise, the new owner shall be entitled to claim over
the remaining life of the building the unexhausted balance of the
original cost of such building.

(3) In cases in which, in ascertaining the chargeable income of a
person carrying on a business or employment, a deduction has been
allowed in any year of assessment under the provisions of this
section in respect of property and during the year of assessment -

(a) the property or any part thereof ceases to belong to the person
carrying on the business or employment, whether on a sale of
the property or any part thereof or in any other circumstances



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of any description; or

(b) while continuing to belong to the person carrying on the
business or employment, the property or any part thereof
permanently ceases to be used for the purposes of the business
or employment carried on by him; or

(c) the business or employment is permanently discontinued, the
property not having previously ceased to belong to the person
carrying on the business or employment,

the person liable to tax shall render to the Commissioner, in the
year of assessment, together with his return of income, a statement
in respect of the property in question showing the following items -

(i) the amount of the capital expenditure on the provision
thereof;

(ii) the total depreciation which has occurred by reason of
exhaustion or wear and tear since the date of purchase of
such property, including the aggregate amount of all
deductions previously allowed under the provisions of this
section; and

(iii) the amount of all sale, insurance, salvage or compensation
moneys in respect thereof or the written down value of
such capital item:

Provided that the demolition of a building at the instance of the
owner shall not be a ground for rendering a balancing statement if
made before the lapse of five years from the date of acquisition.

(4) In ascertaining the chargeable income of a person who is
required under sub-section (3) to render a balancing statement to the
Commissioner, a deduction (hereinafter referred to as a «balancing
deduction») shall be allowed or, as the case may be, an addition
(hereinafter referred to as a «balancing addition») shall be made, and
such balancing deduction or balancing addition shall be calculated by
reference to the balancing statement or statements rendered by the
person in respect of the year of assessment as follows -



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(a) the amount of a balancing deduction 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;

(b) the amount of the balancing addition shall be the amount by
which the sum of the amounts of item (ii) and item (iii) of the
balancing statement exceeds the amount of item (i) of that
statement:

Provided that in no case shall the balancing addition exceed the
aggregate amount of any deductions previously allowed under
the provisions of this section and included in item (ii) of the
balancing statement.

(5) For the purposes of sub-sections (3) and (4) the term
«property» does not include buildings which are referred to in sub-
section (2) of section 9.

(6) Where property, in respect of which any of the events mentioned
in paragraphs (a) and (b) of sub-section (3) has occurred, is replaced
by the owner thereof and a balancing addition falls to be made by
reason thereof, then, if by notice in writing to the Commissioner he
so elects, the following provisions shall have effect, that is to say -

(a) if the amount of the balancing addition which would have been
made is greater than the capital expenditure on providing the
new property -

(i) the balancing addition shall be an amount equal to the
difference; and

(ii) no balancing deduction under sub-section (4) and no
deduction under paragraph (a) of sub-section (2) shall be
allowed in respect of such new property; and

(iii) in considering whether any balancing addition 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


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provisions of this section, 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 greater than, the amount of the balancing addition
that would have been made -

(i) the balancing addition shall not be made; and

(ii) the amount of any deductions under the provisions of this
section shall be calculated as if the capital expenditure on
providing such new property had been reduced by the
amount of the balancing addition; and

(iii) in considering whether any balancing deduction or
balancing addition falls to be made in respect of such new
property, the aggregate amount of all deductions
previously allowed in respect of such property under the
provisions of this section, shall be deemed to have been
increased by an amount equal to the amount of the
balancing addition that would have been made.

(7) Where a person has delivered a balancing statement, the
Commissioner may -

(a) accept the statement and make a balancing deduction or
addition accordingly; or

(b) refuse to accept the statement and, to the best of his
judgment, determine the amount of balancing deduction
or addition and make a balancing deduction or addition
accordingly.

(8) For the purposes of this section -

(a) 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;

(b) the sale moneys in respect of any property sold shall be the



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amount which in the opinion of the Commissioner such
property would have realized if sold in the open market at
the time it was sold;

(c) where there is no sale, insurance, salvage or compensation
or if there is no written down value in respect of any
property, the amount deemed receivable in respect of such
property, shall be the amount which in the opinion of the
Commissioner such property would have realized if sold in
the open market at the time of the event;

(d) the word "business" shall include the letting of buildings;

(e) any deduction or investment deduction allowed under the
provisions of any law formerly in force relating to the
imposition of income tax shall be deemed to be a deduction
allowed under the provisions of this Law.
Deductions not 11. Notwithstanding the provisions of any other section, for the
allowed purpose of ascertaining the chargeable income of any person no
deduction shall be allowed in respect of -
(1) domestic or private expenses including the cost of travelling
between the place of residence and the place of work;
(2) rent of any premises owned and used in connection with the
carrying on by him of a business;
(3) any remuneration or interest on capital paid or credited to
himself;
(4) cost of goods taken out of the business for the use of the
proprietor or any partner or the family of such proprietor
or partner;
(5) any disbursements or expenses not being money wholly and
exclusively laid out or expended for the purpose of
acquiring the income;
(6) any capital withdrawn or any sum employed or intended to
be employed as capital;
(7) expenditure of any improvements, alterations or additions;
(8) any sum recoverable under an insurance or contract of
indemnity;



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(9) rent of, or cost of repairs to, any premises or part of premises
not paid or incurred for the purposes of producing the income;
(10) any amounts paid or payable in respect of tax under this Law;
(11) any payments of a voluntary nature except such payments as
are allowed under section 14;
(12) any expenses of business entertainment, including hospitality of
any kind, made in connection with a business :
Provided that this sub-section does not apply to the extent

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