INCOME TAX ACT, 1967

57.—The tax under Cases I and II of Schedule D shall be charged without any other deduction than is by this Act allowed.

58 Basis of assessment.

58.—(1) Subject to the provisions of this section and sections 59 and 60, tax shall be charged under Case I or Case II of Schedule D on the full amount of the profits or gains of the year preceding the year of assessment.

• (2) Where the trade or profession has been set up and commenced within the year of assessment, the computation of the profits or gains chargeable under Case I or Case II of Schedule D shall be made either on the full amount of the profits or gains arising in the year of assessment or according to the average of such period, not being greater than one year, as the case may require and as may be directed by the inspector.

• (3) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within the year preceding the year of assessment shall be charged on the full amount of the profits or gains for one year from the time of such setting up and commencement, but shall be entitled, on giving notice in writing to the inspector within twelve months after the end of the year of assessment, to be charged to income tax on the amount of the profits or gains of the year of assessment.

• (4) Any person chargeable with income tax in respect of the profits or gains of any trade or profession which has been set up and commenced within the year next before the year preceding the year of assessment shall be entitled, on giving notice in writing to the inspector within twelve months after the end of the year of assessment, to have the assessment reduced by the amount (if any) by which the aggregate amount of the respective assessments for the year of assessment and the year preceding that year exceed the total amount of the profits or gains of those two years.

• (5)
• (a) Where in any year of assessment a trade or profession is permanently discontinued then, notwithstanding anything contained in this Act—

• (i) the person charged or chargeable with tax in respect thereof shall be charged for that year on the amount of the profits or gains of the period beginning on the 6th day of April in that year and ending on the date of the discontinuance, subject to any deduction or set-off to which he may be entitled under section 308 or 309, and, if he has been charged otherwise than in accordance with this paragraph, any tax overpaid shall be repaid, or an additional assessment may be made upon him, as the case may require;

• (ii) if the profits or gains of the year ending on the 5th day of April in the year preceding the year of assessment in which the discontinuance occurs exceed the amount on which the person has been charged for that preceding year, or would have been charged if no such deduction or set-off as aforesaid had been allowed, an additional assessment may be made upon him, so that he shall be charged for that preceding year on the amount of the profits or gains of the said year ending on the 5th day of April, subject to any such deduction or set-off as aforesaid to which he may be entitled.

• (b) In the case of the death of a person who, if he had not died, would, under this subsection, have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators, and shall be a debt due from and payable out of his estate.

• (6) The reference in subsection (5) to the discontinuance of a trade or profession shall be construed as referring to a discontinuance occurring by reason of the death while carrying on such trade or profession of the person carrying on the same as well as to a discontinuance occurring in the lifetime of such person, and for the purposes of subsection (5) such death shall be deemed to cause a discontinuance and such discontinuance shall be deemed to take place on the day of such death.

59 Changes of proprietorship.

59.—(1) If at any time after the 5th day of April, 1965, a trade or profession which immediately before that time was carried on by an individual person (hereafter in this subsection referred to as the predecessor) becomes carried on by another individual person or by a partnership of persons (including a partnership in which the predecessor is a partner), the tax payable for all years of assessment by the predecessor shall be computed as if the trade or profession had been permanently discontinued at that time.

• (2) If at any time after the 5th day of April, 1965, an individual person (hereafter in this subsection referred to as the successor) succeeds to a trade or profession which immediately before that time was carried on by another individual person or by a partnership of persons (including a partnership in which the successor was a partner), the tax payable for all years of assessment by the successor shall be computed as if he had set up or commenced the trade or profession at that time.

• (3) In the case of the death of a person who, if he had not died, would, under the provision of this section, have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators, and shall be a debt due from and payable out of his estate.

60 Period of computation of profits.

60.—(1) Where, in the case of any trade or profession or of the occupation of any land occupied solely or mainly for the purpose of husbandry or of the occupation of any woodlands, it has been customary to make up accounts:—

• (a) if only one account was made up to a date within the year preceding the year of assessment, and that account was for a period of one year, the profits or gains of the year ending on that date shall be taken to be the profits or gains of the year preceding the year of assessment;

• (b) if no account for a period of one year was made up to a date within the year preceding the year of assessment, or if more accounts than one were made up to dates within that year, the Revenue Commissioners shall decide what period of twelve months shall be deemed to be the year the profits or gains of which are to be taken to be the profits or gains of the year preceding the year of assessment.

• (2) Where the Revenue Commissioners have given a decision under subsection (1) (b) and it appears to them that in consequence thereof the tax for the last preceding year of assessment in respect of the profits or gains from the same source should be computed on the profits or gains of a corresponding period, they may give directions to that effect and an assessment or additional assessment or repayment of tax shall be made accordingly.

• (3) An appeal shall lie against any assessment or additional assessment or in respect of any repayment of tax under subsection (2), and any such appeal shall be made to the Special Commissioners who shall consider the circumstances and grant such relief, if any, as is just, and their determination shall be final and conclusive, unless the person assessed requires that his appeal shall be reheard under section 429, or unless under this Act a case is required to be stated for the opinion of the High Court.

• (4) In the case of the death of a person who, if he had not died, would, under the provisions of this section, have become chargeable to income tax for any year, the tax which would have been so chargeable shall be assessed and charged upon his executors or administrators and shall be a debt due from and payable out of his estate.

61 General Rule as to deductions.

61.—Subject to the provisions of this Act, in computing the amount of the profits or gains to be charged, no sum shall be deducted in respect of—

• (a) any disbursements or expenses, not being money wholly and exclusively laid out or expended for the purposes of the trade or profession;

• (b) any disbursements or expenses of maintenance of the parties, their families or establishments or any sums expended for any other domestic or private purposes distinct from the purposes of such trade or profession;

• (c) the rent or annual value of any dwelling-house or domestic offices or any part thereof, except such part thereof as is used for the purposes of the trade or profession:

Provided that where any such part is so used, the sum so deducted shall be such as may be determined by the inspector and shall not, unless in any particular case the inspector is of opinion that, having regard to all the circumstances, some greater sum ought to be deducted, exceed two thirds of the annual value or of the rent bona fide paid for the said dwelling-house or offices;

• (d) any sum expended for repairs of premises occupied, or for the supply, repairs, or alterations of any implements, utensils, or articles employed for the purposes of the trade or profession, beyond the sum actually expended for those purposes;

• (e) any loss not connected with or arising out of the trade or profession;

• (f) any capital withdrawn from, or any sum employed or intended to be employed as capital in such trade or profession;

• (g) any capital employed in improvements of premises occupied for the purposes of the trade or profession;

• (h) any interest which might have been made if any such sums as aforesaid had been laid out at interest;

• (i) any debts, except bad debts proved to be such to the satisfaction of the inspector and doubtful debts to the extent that they are respectively estimated to be bad. In the case of the bankruptcy or insolvency of a debtor, the amount which may reasonably be expected to be received on any such debt shall be deemed to be the value thereof;

• (j) any average loss beyond the actual amount of loss after adjustment;

• (k) any sum recoverable under an insurance or contract of indemnity;

• (l) any annual interest, or any annuity, or other annual payment payable out of the profits or gains;

• (m) any royalty or other sum paid in respect of the user of a patent.

62 Trading stock of discontinued trade.

62.—(1) In computing the profits or gains of a trade which has been discontinued, any trading stock belonging to the trade at the discontinuance thereof shall be valued in accordance with the following provisions:

• (a) in the case of any such trading stock—

• (i) which is sold, or is transferred for valuable consideration, to a person who carries on or intends to carry on a trade in the State, and

• (ii) the cost of which to such person on such sale or transfer may be deducted by him as an expense in computing for any purpose of this Act the profits or gains of the said trade carried on or intended to be carried on by him,

the value of such trading stock shall be taken to be the price paid therefor on such sale or the value of the consideration given therefor on such transfer, as the case may be;

• (b) in the case of any other such trading stock, the value thereof shall be taken to be the amount which it would have realised if it had been sold in the open market at the discontinuance of the trade.

• (2) In this section—

“trading stock” means property of any description, whether real or personal, which is either—

• (a) property such as is sold in the ordinary course of the trade in relation to which the expression is used or would be so sold if it were mature or if its manufacture, preparation, or construction were complete, or

• (b) materials such as are used in the manufacture, preparation, or construction of property such as is sold in the ordinary course of the said trade,

references to a trade having been discontinued or to the discontinuance of a trade shall be construed as not referring to or including any case where such trade was carried on by a single individual and is discontinued by reason of his death (whether such trade is or is not continued by another person after such death) but shall be construed as referring to and including every other case where a trade has been discontinued or is, by virtue of any of the provisions of this Act, treated as having been discontinued for the purpose of computing tax.

63 Deductions in relation to the establishment or alteration of superannuation schemes.

63.—Where a superannuation scheme is established in connection with a trade or undertaking or a superannuation scheme so established is altered and the person by whom the trade or undertaking is carried on makes a payment in respect of expenses (including a payment in respect of professional fees, but not including a payment by way of contribution towards the cost of providing the benefits payable under the scheme) in connection with such establishment or alteration, then, if the scheme or, as the case may be, the altered scheme is—

• (a) operated through a fund approved, whether in whole or in part, by the Revenue Commissioners for the purposes of section 222,

• (b) approved, whether in whole or in part, by the Revenue Commissioners under section 229, or

• (c) an excepted scheme within the meaning of section 228 (2),

the amount of the payment shall be allowed to be deducted in the computation, for the purposes of assessment to income tax, of the profits or gains of the trade or undertaking as an expense incurred when the payment is made:

Provided that where, in a case falling within paragraph (a) or (b), a part only of the relevant fund or scheme is approved as therein mentioned, the deduction shall be restricted to so much of the payment as is referable to that part.

64 Deduction for corporation, profits tax.

64.—(1) Where any company has paid corporation profits tax in respect of any accounting period ending on or after the 1st day of April, 1966, the amount so paid shall, in computing for purposes of income tax the profits or gains of the company, be allowed to be deducted as an expense incurred in that accounting period:

Provided that there shall be disregarded for the purposes of this subsection so much of the corporation profits tax paid in respect of any such accounting period which began before the 1st day of April, 1966, as is referable to profits apportioned under section 21 (2) of the Finance Act, 1966, to the part of the accounting period before that day.

• (2) Where any company has received repayment of any amount previously paid by it by way of corporation profits tax, the amount repaid shall be treated as profit for the year in which the repayment is received but this subsection shall not apply save where there has been an allowance of the deduction of an amount as an expense in computing profits or gains for purposes of income tax.

• (3) Where in any year of assessment the profits or gains from which a deduction may be made under this section come into computation, but owing to the time at which the amount of the corporation profits tax became ascertained it was impracticable to give effect to the deduction when assessing income tax, the amount by which that tax would have been reduced if effect had been given to the deduction shall be deducted from the amount payable for corporation profits tax or, if there is no corporation profits tax, shall be repaid to the company.

65 Exclusion of annual value of property.

65.—(1) The computation of tax shall be made exclusive of the annual value of property occupied for the purpose of the trade or profession and separately assessed and charged under Schedule A.

• (2) Where any lands, tenements, hereditaments or other premises of whatsoever description used for the purpose of any trade or profession are situate outside the State, no deduction or set-off shall, in estimating the amount of annual profits or gains arising or accruing from that trade or profession, in any manner be allowed on account or in respect of the annual value of those premises.

• (3) Where, in estimating the amount of annual profits or gains arising or accruing from any trade or profession and chargeable to tax under this Schedule, any sum is deducted on account of the annual value of the lands, tenements and hereditaments used for the purpose of such trade or profession, the sum so deducted shall not exceed the amount of the assessment of the lands, tenements and hereditaments for the purpose of tax under Schedule A as reduced for the purpose of collection.

• (4)
• (a) Subsection (3) shall not apply in the case of an industrial building or structure within the meaning of section 255 which is not a building or structure to which section 264 applies.

• (b) Where, in the case of premises valued under the Valuation Acts as a unit, a part is, and a part is not, a building or structure to which section 264 applies, the annual value of each part shall be arrived at by apportionment of the rateable valuation of the premises, and section 54 (3) (c) and section 54 (4) shall apply to any such apportionment as they apply to an apportionment required by section 54 (3).

66 Power to omit Schedule A assessments in certain cases.

66.—(1) In this section—

“basis period” means, in relation to a year of assessment, the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period;

“company” means any body corporate;

“short lease” has the same meaning as in Chapter VI of Part IV;

“trade” means a trade within Case I of Schedule D;

“unit of valuation” means any lands, tenements or hereditaments valued under the Valuation Acts as a unit.

• (2)
• (a) Subject as hereafter provided, this section applies to any unit of valuation in respect of which a company is assessable under Schedule A being a unit of valuation of which no part fails, at any time during the year of assessment, to satisfy one or other of the following conditions, that is to say:

• (i) that it is wholly occupied by the company assessable as aforesaid for the purposes of a trade, or

• (ii) that it, with or without other premises, is subject to a short lease granted by the company not being such a lease as is referred to in section 86.

• (b) This section does not apply to a unit of valuation—

• (i) of which the whole or a part is occupied for the purposes of a trade which consists wholly or partly of exempted trading operations within the meaning of Chapter I of Part XXV, or

• (ii) in respect of which any rent is payable under a short lease by the company assessable under Schedule A in respect thereof.

• (c) For the purposes of paragraph (a) (ii), the currency of a lease shall be determined as it would be determined for the purposes of section 81 (4).

• (3) Notwithstanding anything in this Act, no assessment under Schedule A need be made for any year of assessment in respect of a unit of valuation to which this section applies; and where, for any year of assessment, an assessment under Schedule A is not made, the annual value of the unit of valuation shall not, save as is hereafter provided, be taken into account for any purpose of this Act in relation to the company assessable under Schedule A in respect thereof.

• (4) Where—

• (a) the whole or a part of a unit of valuation to which this section applies (hereafter in this subsection referred to as the unit) is occupied at any time during a year of assessment (hereafter in this subsection referred to as the relevant year) for the purposes of a trade carried on by the company concerned, and

• (b) an assessment under Schedule A is not made for the relevant year in respect of the unit,

the following provisions shall apply to the computation for the purpose of assessment of the amount of the profits or gains of the trade for the basis period for the relevant year but not to the computation for the purpose of relief of the amount of a loss sustained in the trade in that period:

• (i) the profits or gains of the basis period shall first be computed as if an assessment under Schedule A in respect of the unit had been made for every year of assessment falling wholly or partly within the basis period for which such an assessment was not made;

• (ii) the amount computed in accordance with paragraph (i) shall then be adjusted as if, in addition to the trading receipts taken into account in arriving at it, the company had received in the basis period an amount of trading receipts equal to the sum specified in the next following paragraph and the amount computed in accordance with paragraph, (i) as so adjusted shall for all purposes of this Act be taken to be the amount of the profits or gains of the basis period;

• (iii) the sum referred to in paragraph (ii) is a sum equal to the amount of the assessment under Schedule A which might have been made in respect of the unit for the relevant year or, in a case in which section 23 would have applied, the net amount, as reduced for the purposes of collection, of the assessment which might have been made as aforesaid, provided that in a case in which the whole of the unit is not occupied for the purposes of the trade throughout the relevant year, the sum hereinbefore specified shall be appropriately reduced.

• (5)
• (a) Where—

• (i) the assessment under Schedule A for any year of assessment (hereafter in this subsection referred to as the relevant year) in respect of a unit of valuation to which this section applies (hereafter in this subsection referred to as the unit) would, if made, fall to be reduced for the purposes of collection under section 23,

• (ii) an assessment under Schedule A is not made for that year in respect of the unit,

• (iii) a period (hereafter in this subsection referred to as the unassessed period) being the whole or a part of that year falls within a period (hereafter in this subsection referred to as the accounting period) for which the accounts of the company concerned are made up, and

• (iv) the whole or a part of the unit is occupied at any time during the unassessed period for the purposes of a trade carried on by the company,

there shall be allowed in the computation of the amount of a loss sustained in the trade in the accounting period such deduction, if any, as is authorised by paragraph (b).

• (b) (i) In a case in which the unassessed period coincides with the relevant year and the whole of the unit was throughout that period occupied for the purposes of the trade, the deduction under paragraph (a) shall be equal to the amount, if any, by which the net amount of the assessment under Schedule A which might have been made for the relevant year in respect of the unit falls short of the sum which, if the said assessment had been made, would have fallen to be deducted, under section 65 in respect of the unassessed period on account of the annual value of the unit.

• (ii) In any other case, the deduction under paragraph (a) shall be the same proportion of the deduction which would have been allowable thereunder, if sub-paragraph (i) of this paragraph applied, as the proportion which the sum which in the circumstances of the case would, if an assessment under Schedule A in respect of the unit had been made for the relevant year, have fallen to be deducted, under section 65, in respect of the unassessed period on account of the annual value of the unit bears to the sum which would have fallen to be deducted under that section if the circumstances were as stated in the said subparagraph (i).

• (6) Where in consequence of the operation of the foregoing provisions of this section the amount of the profits or gains of a trade on which a company is chargeable to tax under Case I of Schedule D is, for any year of assessment, greater than it would otherwise have been, only so much of the profits or gains on which the company is so chargeable as does not exceed the amount on which it would have been so chargeable if this section had not been enacted and only so much of the tax payable by the company as is attributable to that part of the profits or gains shall be taken into account in determining the amount of any relief to which the company is entitled for the year of assessment under section 220 or Chapter II, III or IV of Part XXV.

• (7) The circumstance that in accordance with this section an assessment under Schedule A is not made in respect of any unit of valuation shall not have the effect that a sum, which would otherwise be treated in accordance with Chapter III of Part V, as a perquisite of an office or employment, is not so treated.

• (8)
• (a) A company may by notice in writing delivered to the inspector within the time limited by paragraph (b) elect that this section shall not have effect in relation to it and, where a company has so elected, no unit of valuation in respect of which it is assessable under Schedule A shall be a unit of valuation to which this section applies.

• (b) A notice under paragraph (a) shall be delivered—

• (i) in the case of a company in existence at the commencement of this Act (other than a company incorporated on a date more than six months before such commencement) within six months from the date on which the company was incorporated,

• (ii) in the case of a company not in existence at the commencement of this Act, within six months from the date on which the company is incorporated.

• (c) A company may at any time withdraw a notice given by it under paragraph (a) or under section 10 (8) of the Finance Act, 1964, and thereupon the notice shall cease to have effect as from the beginning of the next following year of assessment.

67 Allowance for industrial premises.

67.—(1) In this section “premises” means an industrial building or structure within the meaning of section 255 which is not a building or structure to which section 264 applies.

• (2) In estimating the amount of annual profits or gains arising or accruing from any trade the profits of which are chargeable to tax under Case I of Schedule D, there shall, notwithstanding anything in section 65, be allowed to be deducted, as expenses incurred in any year, on account of any premises owned by the person carrying on such trade and occupied by him for the purposes of the said trade, and situate outside the State, a deduction equal to one-third of the annual value of those premises.

• (3) In estimating the profits for any year of any of the concerns which, by virtue of section 53, are charged under Case I (b) of Schedule D, there shall be allowed to be deducted, as expenses incurred in any year, on account of any premises owned by the person carrying on the concern and occupied by him for the purposes of such concern, a deduction equal to one-third of the annual value of those premises.

• (4) Annual value for the purposes of this section shall be estimated according to the principles governing the estimation of the annual value for the purposes of Schedule A.

68 Statement of profits.

68.—(1) Every statement of profits to be charged under Schedule D which is made by any person—

• (i) on his own account; or

• (ii) on account of some other person for whom he is chargeable, or who is chargeable in his name,

shall include every source of income so chargeable.

• (2) Where a person delivers a statement of profits as aforesaid on behalf of some other person, or of a body of persons, the statement shall be delivered in the assessment district where the person delivering the statement or the body of persons respectively would be assessable and chargeable if acting on his or their own behalf.

Chapter III Trades and Professions Carried on in Partnership

69 Interpretation.

69.—(1) In this Chapter—

“annual payment” means any payment from which, apart from any insufficiency of profits or gains of the person making it, tax is deductible under section 433;

“balancing charge” means a balancing charge under Part XVI;

“basis period” means, in relation to a year of assessment, the period on the profits or gains of which income tax for that year falls to be finally computed under Case I of Schedule D in respect of the trade in question or, where, by virtue of this Act, the profits or gains of any other period are to be taken to be the profits or gains of the said period, that other period;

“capital allowance” means any allowance, other than an allowance falling to be made in computing profits or gains, under section 241 or Part XIV, XV, XVI or XVII;

“partnership trade” means a trade which is carried on by two or more persons in partnership;

“precedent partner” means in relation to a partnership the partner who, being resident in the State—

• (a) is first named in the partnership agreement, or

• (b) if there is no agreement, is named singly or with precedence to the other partners in the usual name of the firm, or

• (c) is the precedent acting partner, if the person named with precedence is not an acting partner,

and any reference to precedent partner shall, in a case in which no partner is resident in the State, be construed as a reference to the agent, manager, or factor of the firm resident in the State;

“relevant period” means in relation to a partnership trade a continuous period the whole or part of which is after the 5th day of April, 1965—

• (a) beginning at a time when either the trade was not carried on immediately before it by two or more persons in partnership or none of the persons then carrying on the trade in partnership was one of the persons who immediately before it carried on the trade in partnership, and

• (b) continuing so long as (but only so long as) there has not occurred a time when either the trade is not carried on immediately after it by two or more persons in partnership or none of the persons then carrying on the trade in partnership is one of the persons who immediately after it carry on the trade in partnership,

subject to the proviso that, in the case of any such period which, apart from this proviso, would have begun before the 6th day of April, 1965, “the relevant period” shall be taken as having begun at the time, or at the last of two or more times, at which, a change having occurred in the partnership of persons then engaged in carrying on the trade, the persons so engaged immediately after the time fell to be treated for the purposes of income tax as having set up or commenced the trade at that time.

• (2) In relation to a case in which a partnership trade is from time to time during a relevant period carried on by two or more different partnerships of persons, any reference in this Chapter to the partnership shall, unless the context otherwise requires, be construed as including a reference to any partnership of persons by whom the trade has been carried on since the beginning of the relevant period and any reference to a partner shall be construed correspondingly.

• (3) The provisions of this Chapter shall, with any necessary modifications, apply in relation to professions, as they apply in relation to trades.

70 Power to require return as to sources of partnership income and amounts derived therefrom.

70.—(1) The precedent partner of any partnership, when required to do so by a notice given to him in relation to any year of assessment by an inspector, shall, within the time limited by the notice, prepare and deliver to the inspector a return in the prescribed form of—

• (a) all the sources of income of the partnership for the year of assessment (in this section referred to as the preceding year) immediately preceding the year of assessment in relation to which the notice is given;

• (b) the amount of income from each source for the preceding year computed in accordance with subsection (2);

• (c) such further particulars for the purposes of income tax (including sur-tax) for the preceding year or the year of assessment as may be required by the notice or indicated by the prescribed form.

• (2) The amount of income from any source to be included in a return under this section shall be computed in accordance with the provisions of this Act save that the computation shall be made in all cases by reference to the preceding year:

Provided that—

• (a) in the case of such interest as is referred to in section 344 the computation shall be made without regard to that section;

• (b) where, in the case of a trade, an account has been made up to a date within the preceding year or more accounts than one have been made up to dates within that year, the computation shall be made by reference to the period or to all the periods, where there are more than one, for which accounts have been made up as aforesaid.

• (3) If a person delivers to any inspector a return in a prescribed form, he shall be deemed to have been required by a notice under this section to prepare and deliver that return.

• (4) In proceedings for recovery of a penalty incurred under section 500 or 501 in relation to a return referred to in the preceding provisions of this section—

• (a) a certificate signed by an inspector which certifies that he has examined his relevant records and that it appears from them that a stated notice was duly given to the defendant on a stated day shall be evidence until the contrary is proved that that person received that notice in the ordinary course,

• (b) a certificate signed by an inspector which certifies that he has examined his relevant records and that it appears from them that, during a stated period, a stated return was not received from the defendant shall be evidence until the contrary is proved that the defendant did not, during that period, deliver that return,

• (c) a certificate certifying as provided for in paragraph (a) or (b) and purporting to be signed by an inspector may be tendered in evidence without proof and shall be deemed until the contrary is proved to have been signed by such inspector.

• (5) In this section “prescribed” means prescribed by the Revenue Commissioners.

71 Separate assessment of partners.

71.—(1) In the case of a partnership trade this Act shall, subject to the provisions of this Chapter, have effect in relation to any partner in the partnership as if for any relevant period—

• (a) any profits or gains arising to him from the trade and any loss sustained by him therein were respectively profits or gains of, and loss sustained in, a trade (hereafter in this Chapter referred to as a several trade) carried on solely by him being a trade—

• (i) set up or commenced at the beginning of the relevant period, or if he commenced to be engaged in carrying on the partnership trade at some time in the relevant period other than the beginning thereof, at the time when he so commenced, and

• (ii) when he ceases to be engaged in carrying on the partnership trade, either during the relevant period or at the end thereof, permanently discontinued at the time when he so ceases, and

• (b) he had paid the part he was liable to bear of any annual payment paid by the partnership.

• (2)
• (a) For any year or period within the relevant period the amount of the profits or gains arising to any partner from his several trade, or the amount of loss sustained by him therein, shall, for the purposes of subsection (1), be taken to be so much of the full amount of the profits or gains of the partnership trade or, as the case may be, of the full amount of the loss sustained in the partnership trade as would fall to his share on an apportionment thereof made in accordance with the terms of the partnership agreement as to the sharing of profits and losses.

• (b) Where the year or period (hereafter in this paragraph referred to as the period of computation) for which the profits or gains of, or the loss sustained in, the several trade of a partner is to be computed under this subsection, is, or is part of, a year or period for which an account of the partnership trade has been made up, sections 60 and 107 shall apply in relation to the partner as if an account of his several trade had been made up for the period of computation.

• (c) Where in the case of the several trade of a partner the basis period for any year of assessment begins before the 6th day of April, 1965, the profits or gains of that basis period shall be computed in accordance with the foregoing provisions of this subsection notwithstanding that those provisions were not in force in that period or some part thereof.

• (3) For the purposes of subsection (2), the full amount of the profits or gains of the partnership trade for any year or period, or the full amount of the loss sustained in such trade in any year or period, shall, subject to section 73, be determined by the inspector and any such determination shall be made as it would have fallen to be made if the trade—

• (a) had been set up or commenced at the beginning of the relevant period, and

• (b) where the relevant period has come to an end, had been permanently discontinued at the end of that period, and

• (c) had at all times within the relevant period been carried on by one and the same person and everything done in the carrying on thereof to or by the persons by whom it was in fact carried on had been done to or by that person:

Provided that in a case in which the relevant period began at some time before the 6th day of April, 1965, and the trade did not fall to be treated for the purposes of income tax as having been set up or commenced at that time, the relevant period shall, for the purposes of this subsection, be deemed to have begun at the time at which the trade was treated for the purposes of income tax as having been set up or commenced and, in any such case, any profits or gains arising to any person from the trade, or any loss sustained by him in the trade, for any year or period within the relevant period during which he was engaged in the trade on his own account shall be deemed to be profits or gains arising to him from, or, as the case may be, loss sustained by him in, a partnership trade in which he was entitled during the year or period in question to the full amount of the profits or gains arising or was liable to bear the full amount of the loss.

• (4) Where the shares to which the partners are entitled in the basis period for a year of assessment do not exhaust the profits of the trade carried on by the partnership for that period, an assessment shall be made under Case IV of Schedule D on the precedent partner in respect of the unexhausted portion of the profits and the precedent partner shall, if and when such balance falls to be paid to a person entitled thereto, be entitled to deduct from such balance any amounts of tax which have been assessed on and paid by him and he shall be acquitted and discharged of any such amounts.

• (5) This section shall not cause any income which, apart from this section, is not earned income to become earned income.

72 Capital allowances and balancing charges in partnership cases.

72.—(1) The provisions of this Act as regards the making of capital allowances and balancing charges in charging the profits or gains of a trade shall, in relation to the several trade of a partner in a partnership, have effect subject to the following provisions of this section.

• (2) Where for any year of assessment a claim has been made, as provided by subsection (9), by the precedent partner for the time being of any partnership, there shall be made to any partner in the partnership in charging the profits or gains of his several trade a capital allowance in respect of any expenditure or property equal to his appropriate share of any capital allowance for that year (excluding any amount carried forward from an earlier year) (hereafter in this section referred to as a joint allowance) which, apart from any insufficiency of profits or gains, might have been made in respect thereof in charging the profits or gains of the partnership trade if this Act had provided that those profits should be charged by joint assessment on the persons carrying on the trade in the year of assessment as if—

• (a) those persons had at all times been carrying on the trade and everything done to or by their predecessors in, or in relation to, the carrying on thereof had been done to or by them, and

• (b) the trade had been set up or commenced at the beginning of the relevant period and, where the relevant period has come to an end, had been permanently discontinued at the end of that period.

• (3) For any year of assessment there shall be made on any partner in a partnership in charging the profits or gains of his several trade a balancing charge equal to his appropriate share of any balancing charge (hereafter in this section referred to as a joint charge) which would have fallen to be made for that year in charging the profits or gains of the partnership trade if this Act had provided that those profits should be charged as specified in subsection (2).

• (4) Where at the end of the relevant period a person or a partnership of persons succeeds to a partnership trade and any property which, immediately before the succession takes place, was in use for the purposes of the partnership trade and, without being sold is, immediately after the succession takes place, in use for the purposes of the trade carried on by the successor or successors, section 300 (1) shall apply as it applies where, by virtue of any of the provisions of section 59, a trade is to be treated as discontinued.

• (5) Where for a partnership trade the relevant period began at some time before the 6th day of April, 1965, and the trade did not fall to be treated for the purposes of income tax as having been set up or commenced at that time, the relevant period shall, for the purposes of subsections (2) and (3), be deemed to have begun at the time at which the trade was treated for the purposes of income tax as having been set up or commenced.

• (6)
• (a) In relation to any partnership trade the total amount of all joint allowances for any year of assessment and the total amount of all joint charges for that year shall, subject to section 73, be determined by the inspector.

• (b) Where after a determination has been made under paragraph (a) the inspector becomes aware of any facts or events by reference to which the determination is in his opinion incorrect, he may from time to time and as often as appears to him to be necessary make a revised determination, and any such revised determination shall supersede any earlier determination and any such additional assessments or repayments of tax shall be made as may be necessary.

• (7)
• (a) Subject to the provisions of paragraph (b), for any year of assessment the partners' appropriate shares of a joint allowance, or of a joint charge, shall be arrived at by apportioning the full amount thereof between the partners on the same basis as a like amount of profits arising in the trading period from the partnership trade, and accruing from day to day over that period, would fall to be apportioned in accordance with the terms of the partnership if any salary, interest on capital or other sum to which any partner was entitled without regard to the amount of the profits arising from the partnership trade had already been provided for.

In this paragraph “trading period” means, where the relevant period begins or ends during the year of assessment for which the joint allowance or joint charge is computed, the part of that year of assessment which falls within the relevant period or, in any other case, that year of assessment.

• (b) If for any year of assessment all the partners (any deceased partner being represented by his legal representatives) allege, by notice in writing signed by them and sent to the inspector within twelve months after the end of the year of assessment, that hardship is caused to one or more partners by the apportionment of a joint allowance or joint charge on the basis set out in paragraph (a), the Revenue Commissioners may, on being satisfied that hardship has been caused, give such relief as in their opinion is just by making a new apportionment of the joint allowance or joint charge, and any such new apportionment shall for all the purposes of this Act have effect as if it were an apportionment made under paragraph (a) and such additional assessments or repayments of tax shall be made as may be necessary.

• (8) For any year of assessment the aggregate amount of all capital allowances brought forward shall, for the purpose of making the assessments on the partners, be deemed to be a joint allowance for that year and subsection (7) shall apply accordingly.

In this subsection a capital allowance brought forward means—

• (a) any capital allowance or part of a capital allowance falling to be made to the partnership for the year 1964-65 or any earlier year of assessment which might, if Part VIII of the Finance Act, 1965, had not been enacted, have been carried forward and made as a deduction in charging the profits or gains of the partnership trade for the year 1965-66, and

• (b) any capital allowance or part of a capital allowance falling to be made to a partner for 1965-66 or a later year of assessment which, but for this subsection, might have been carried forward and made as a deduction in charging the profits or gains of the several trade of the partner for a year of assessment subsequent to that for which the capital allowance was computed.

• (9) In relation to a partnership trade—

• (a) any claim for a joint allowance for any year of assessment shall be made by the precedent partner as if it were a claim for a capital allowance falling to be made to him and shall be included in the return delivered by him, under section 70, in relation to that year of assessment, and

• (b) any claim for a joint allowance shall be deemed to be a claim by every partner for a capital allowance falling to be made to him being a capital allowance equal to his appropriate share of that joint allowance.

73 Modification of provisions as to appeals.

73.—(1) The inspector may give notice to the partnership concerned of any determination made by him under section 71 (3) or 72 (6) by delivering a statement in writing thereof to the precedent partner for the time being of the partnership and all the provisions of this Act relating to appeals against assessments to income tax shall, with any necessary modifications, apply in relation to any determination and any notice of a determination as if they were respectively such an assessment and notice of such an assessment.

• (2) Where a determination has become final and conclusive or, in the case of a determination under section 72 (6) has become final and conclusive subject to paragraph (b) of that subsection, no question as to its correctness shall be raised on the hearing or on the rehearing of an appeal by any partner either against an assessment in respect of the profits or gains of his several trade or against a determination by the inspector on a claim under section 307.

• (3) Where on any appeal such as is mentioned in subsection (2) any question arises as to an apportionment falling to be made under section 71 (2) or section 72 (7) and it appears that the question is material as respects the liability to income tax (for whatever year of assessment) of two or more persons, all those persons shall be notified of the time and place of the hearing and shall be entitled to appear and be heard by the Special Commissioners or to make representations to them in writing.

74 Provision as to charges under section 288.

74.—(1) Where for any year of assessment a charge under section 288 (hereafter in this section referred to as a joint charge) would have fallen to be made in charging the profits or gains of a partnership trade if this Act had provided that those profits or gains should be charged as specified in section 72 (2), there shall be made on any partner in the partnership in charging the profits or gains of his several trade a charge under the said section 288 equal to his appropriate share of the joint charge.

• (2) For the purposes of subsection (1) a partner's appropriate share of a joint charge shall be arrived at in the same way as his appropriate share of a joint charge within the meaning of section 72 is to be arrived at by virtue of subsection (7) of that section.

Chapter IV Case III

75 Income chargeable under Case III.

75.—(1) Save as is hereinafter otherwise provided, income or profits chargeable under Case III of Schedule D shall, for all the purposes of ascertaining liability to income tax, be deemed to issue from a single source, and the provisions of section 77 shall apply accordingly.

• (2) Subsection (1) shall not apply to the following income or profits and such income or profits shall be deemed to arise from separate sources respectively, that is to say:—

• (i) income or profits chargeable under section 215.

• (ii) profits chargeable under section 78, and

• (iii) income from securities and possessions in any place outside the State tax on which under subsections (2) and (3) of section 76 is required to be computed by reference to the amount of the income received in the State.

76 Foreign securities and possessions.

76.—(1) Subject to the provisions of this section and section 77, tax chargeable under Case III of Schedule D in respect of income arising from securities and possessions in any place outside the State shall be computed on the full amount thereof arising in the year preceding the year of assessment whether the income has been or will be received in the State or not, subject, in the case of income not received in the State—

• (a) to the same deductions and allowances as if it had been so received; and

• (b) to the deduction, where such deduction cannot be made under, and is not forbidden by, any other provision of this Act, of any sum which has been paid in respect of income tax in the place where the income has arisen; and

• (c) to a deduction on account of any annual interest or any annuity or other annual payment payable out of the income to a person not resident in the State,

and the provisions of this Act (including those relating to the delivery of statements) shall apply accordingly.

• (2) Subsection (1) shall not apply—

• (a) to any person who satisfies the Revenue Commissioners that he is not domiciled in the State, or that, being a citizen of Ireland, he is not ordinarily resident in the State, or

• (b) to income arising from such securities and possessions as aforesaid which form part of the investments of the foreign life assurance fund of an assurance company.

• (3) In the cases mentioned in subsection (2), the tax shall, subject to the provisions of section 77, be computed on the full amount of the actual sums received in the State from remittances payable in the State, or from property imported, or from money or value arising from property not imported, or from money or value so received on credit or on account in respect of such remittances, property, money or value brought into the State in the year preceding the year of assessment without any deduction or abatement.

• (4) Where the Revenue Commissioners are satisfied that the application of the provisions of this section would give rise to hardship in the case of income derived from an employment exercised wholly outside the State they may grant such relief as in their opinion is just.

• (5) Any person who is aggrieved by the decision of the Revenue Commissioners on any question as to domicile or ordinary residence arising under subsection (2) may, by notice in writing to that effect given to the Revenue Commissioners within two months from the date on which notice of the decision is given to him, make an application to have his claim for relief heard and determined by the Special Commissioners.

• (6) Where an application is made under this section, the Special Commissioners shall hear and determine the claim in like manner as an appeal made to them against an assessment and all the provisions of this Act relating to such an appeal (including the provisions relating to the rehearing of an appeal and to the statement of a case for the opinion of the High Court on a point of law) shall apply accordingly with any necessary modifications.

77 Basis of assessment.

77.—(1) Tax under Case III of Schedule D shall, subject to the provisions of this section, be computed—

• (a) as respects the year of assessment in which the profits or income first arise, on the full amount of the profits or income arising within that year; and

• (b) as respects subsequent years of assessment, on the full amount of the profits or income arising within the year preceding the year of assessment:

Provided that—

• (i) where the profits or income first arose on some day in the year preceding the year of assessment other than the 6th day of April, the computation shall be made on the profits or income of the year of assessment; and

• (ii) where the profits or income first arose on the 6th day of April in the year preceding the year of assessment, or on some day in the year next before the year preceding the year of assessment other than the 6th day of April, the person charged shall be entitled, on giving notice in writing to the inspector at any time within twelve months after the end of the year of assessment, to be charged on the amount of the profits or income of that year, and if the tax charged has been paid, any amount overpaid shall be repaid.

• (2) Tax shall, subject to the provisions of section 76, be paid on the actual amount computed as aforesaid without any deduction.

• (3) If in any year of assessment any person charged or chargeable in respect of income or profits under Case III of Schedule D ceases to possess the whole of such single source of income or profits as is mentioned in section 75 (1) or any of the sources the income of which is directed to be separately computed under subsection (2) of that section, section 58 (5) shall, subject to the necessary modifications, apply in any such case as if the cesser of the possession of such single source or separate sources, as the case may be, were the discontinuance of a trade.

• (4) The references in subsection (3) to a person ceasing to possess a source of income or profits shall be construed as referring to a cesser occurring by reason of the person dying while in possession of the source of income or profits as well as to a cesser occurring in the lifetime of such person, and for the purposes of subsection (3) such death shall be deemed to cause a cesser, and such cesser shall be deemed to take place on the day of such death.

• (5) The provisions of subsection (1) shall, in cases where income tax is to be computed by reference to the amount of income received in the State, have effect as if references therein to income which arises or which arose were references to income which is or was so received.

78 Cattle and milk dealers.

78.—If the inspector finds that lands which have been charged under Schedule B on the assessable value, and which are occupied by a dealer in cattle or a dealer in or a seller of milk, are insufficient for the keep of the cattle brought on to the lands, so that the assessable value affords no just estimate of the profits, he may require a statement of the profits to be delivered, and charge such further sum thereon as, together with the charge under Schedule B, will make up the full sum wherewith the dealer or seller ought to be charged in respect of the like amount of profits charged according to section 77.

Chapter V Case IV—General

79 Basis of assessment.

79.—(1) The nature of the profits or gains, and the basis on which the amount thereof has been computed, including the average, if any, taken thereon, shall be stated to the inspector.

• (2) The computation shall be made, either on the full amount of the profits or gains arising in the year of assessment, or according to the average of such a period, not being greater than one year, as the case may require, and as may be directed by the inspector.

• (3) Every such statement and computation shall be made to the best of the knowledge and belief of the person in receipt of or entitled to the profits or gains.

Chapter VI Taxation of Rents and Certain Other Payments

80 Interpretation.

80.—(1) In this Chapter, save where the context otherwise requires—

“easement” includes any right, privilege or benefit in, over or derived from premises;

“lease” includes an agreement for a lease and any tenancy, but does not include a mortgage, and “lessee” and “lessor” shall be construed accordingly, and “lessee” and “lessor” include, respectively, the successors in title of a lessee or a lessor;

“long lease” means a lease granted for a term exceeding fifty years;

“premises” means any lands, tenements or hereditaments in the State;

“premium” includes any like sum, whether payable to the immediate or a superior lessor;

“rent” includes anything in the nature of rent and any payment made by the lessee to defray the cost of work of maintenance of or repairs to the premises, not being work required by the lease to be carried out by the lessee;

“short lease” means a lease granted for a term not exceeding fifty years;

“unit of valuation” means any lands, tenements or hereditaments valued under the Valuation Acts as a unit.

• (2) In ascertaining, for the purposes of the definitions of “long lease” and “short lease” contained in subsection (1), the duration of a lease, the following provisions shall have effect:

• (a) where the terms of the lease include provision for the determination thereof by notice given either by the lessor or by the lessee, the lease shall not be treated as granted for a term longer than one ending at the earliest date on which it could be determined by notice;

• (b) where any of the terms of the lease (whether relating to forfeiture or to any other matter) or any other circumstance render it unlikely that the lease will continue beyond a date falling before the expiration of the term of the lease, the lease shall not be treated as having been granted for a term longer than one ending on that date.

• (3) Any reference in this Chapter to one person being connected with another shall be construed in accordance with section 96 (3).

• (4) Where the estate or interest of any lessor of any premises is the subject of a mortgage and either the mortgagee is in possession or the rents and profits are being received by a receiver appointed by or on the application of the mortgagee, that estate or interest shall be deemed, for the purposes of this Chapter, to be vested in the mortgagee, and references to a lessor shall be construed accordingly; but the amount of the liability to tax of any such mortgagee shall be computed as if the mortgagor was still in possession or, as the case may be, no receiver had been appointed, and as if it were the amount of the liability of the mortgagor that was being computed.

81 Taxation of rents under short leases.

81.—(1) The profits or gains arising from any rent in respect of any premises under a short lease shall, to the extent provided for by this Chapter, be deemed, for all the purposes of this Act, to be annual profits or gains within Schedule D and the lessor shall be chargeable in respect thereof under Case IV of that Schedule.

• (2) Notwithstanding anything in section 79 (2), income tax in respect of profits or gains chargeable by virtue of this section shall in all cases be computed on the full amount of the profits or gains of the year of assessment.

• (3) Subject to the subsequent provisions of this Chapter, the amount of the profits or gains to be charged under this section shall be arrived at by making from any rent to which the lessor becomes entitled in the year of assessment the deductions authorised by the next following subsection.

• (4) The deductions authorised by this subsection are deductions by reference to any or all of the following matters:

• (a) the amount, if any, on which the lessor is liable to pay, by deduction or otherwise, income tax under Schedule A for the year of assessment in respect of the premises;

• (b) the excess, if any, of the amount of any rent payable by the lessor in respect of the premises, or in respect of a portion thereof, under a short lease over the amount referred to in paragraph (a) or, as the case may be, the portion of the latter amount which is referable to the portion of the premises in respect of which the rent is payable by the lessor;

• (c) any sums borne by the lessor, in accordance with the conditions of the lease, in respect of county rate, municipal rate or other rate, whether such sums are by law charged upon him or upon the lessee;

• (d) the cost to the lessor of any services rendered or goods provided by him, otherwise than by way of maintenance or repairs, being services or goods which he is legally bound under the lease to render or provide but in respect of which he receives no separate consideration;

• (e) the cost of maintenance, repairs, insurance and management of the premises in so far as such cost is, by reason of obligations imposed by the lease, borne by the lessor,

and the amount of the deduction to be made by reference to each of the foregoing matters shall be the amount which would fall to be so made in computing profits or gains under the provisions applicable to Case I of Schedule D if it were enacted that the receipt of rent under a short lease should be deemed to be a trade carried on during the currency of the lease by the lessor for the time being and that the premises comprised in the lease should be deemed to be occupied for the purposes of that trade.

For the purposes of this subsection the currency of a lease shall be deemed to include a period, immediately following its termination, during which the lessor, immediately before the termination, was not in occupation of the premises or any part thereof, but was entitled to possession thereof, if at the end of that period the premises have become subject to another short lease granted by him.

• (5) Where a lessor is entitled to rent in respect of premises (hereafter in this subsection referred to as the said premises) under a short lease and—

• (a) the said premises do not comprise the whole of a unit of valuation or the whole of two or more such units, or

• (b) a rent is payable by the lessor under a short lease in respect of premises which comprise the whole or a part of the said premises and other premises,

the inspector shall make, according to the best of his knowledge and judgment, any appropriate apportionment of rateable valuation or of rent payable by the lessor in determining the amount of any deduction under paragraph (a) (b) or (c) of subsection (4).

• (6) An apportionment made under subsection (5) may be amended by the Special Commissioners, or by the Circuit Judge, on the hearing, or the rehearing, of an appeal against an assessment made on the basis of such apportionment; but, on the hearing, or the rehearing, of any such appeal, a certificate of the Commissioner of Valuation, tendered by either party to the appeal and certifying, as regards premises valued under the Valuation Acts as a unit, the amount of the rateable valuation of the premises attributable to any part of the premises, shall be conclusive as to the amount so attributable.

82 Additional deductions in certain cases.

82.—(1) In this section—

“excepted profits or gains” means profits or gains arising from rent under a short lease in respect of premises which comprise the whole of what was, on the 6th day of April, 1963, a unit of valuation where, for the year of assessment, all the following conditions are satisfied, that is to say:

• (a) the premises are premises to which subsection (2) applies;

• (b) the lease imposes no obligation on the lessee to maintain or repair the fabric or exterior of any building or to contribute to the cost of such maintenance or repairs, and

• (c) the rent to which the lessor is entitled or, in a case in which a deduction is allowable under section 81 (4) (c) in arriving at the amount of the profits or gains for the purpose of assessment under Case IV of Schedule D, the said rent reduced by the deduction allowable as aforesaid, does not exceed £52 per annum;

“profit rent” means, in relation to any premises in respect of which a lessor is, in a year of assessment, entitled to rent under a short lease, the amount (hereafter in this definition referred to as the assessable amount) on which, but for the provisions of the following subsections of this section, the lessor would have been chargeable for the year of assessment under Case IV of Schedule D, in respect of profits or gains arising from the said rent, increased by any deduction allowed under section 81 (4) (a) in arriving at the assessable amount and reduced by the amount, if any, by which any deduction allowed under section 81 (4) (b) in arriving at the assessable amount falls short of the deduction which would have been so allowable if—

• (i) no deduction had been allowable under section 81 (4) (a), and

• (ii) section 81 (4) (b) and section 81 (5) applied to any payment to which section 93 applies as they apply to any rent payable under a short lease.

• (2)
• (a) This subsection applies to any premises which are shown to the satisfaction of the Revenue Commissioners (or, on appeal, to the satisfaction of the Special Commissioners) to be in the year of assessment a controlled dwelling within the meaning of the Rent Restrictions Act, 1960.

• (b) Where for any year of assessment a person is chargeable under Case IV of Schedule D in respect of profits or gains arising from any rent in respect of any premises to which this subsection applies under a short lease, the amount on which he would, apart from this subsection, be so chargeable shall be reduced by an amount equal to two-fifths of the profit rent:

Provided that, for any year of assessment, the aggregate of all amounts by which profits or gains, other than excepted profits or gains, arising to any person are reduced by virtue of this paragraph shall not exceed £200.

• (3) The reference, in the proviso to subsection (2) (b), to profits or gains arising to any person shall be deemed to include, in the case of an individual, a reference to profits or gains arising to the wife or husband of the individual.

In this subsection and subsection (4) “wife” means a married woman who under section 196 (1) is to be treated as living with her husband, and “husband” has a corresponding meaning.

• (4)
• (a) Where in any year of assessment profits or gains arise to both a husband and a wife from rents in respect of premises to which subsection (2) applies and the aggregate (hereafter in this subsection referred to as the gross aggregate) of all amounts by which the said profits or gains would have fallen to be reduced under this section, if the proviso to subsection (2) (b) (hereafter in this subsection referred to as the limiting provision) had been omitted from this section, exceeds what, in consequence of the operation of the limiting provision is the aggregate (hereafter in this subsection referred to as the net aggregate) of all amounts by which the said profits or gains may be reduced, the aggregate of all amounts by which the profits or gains arising to either spouse are reduced shall not exceed the sum which bears to the net aggregate the same proportion as the aggregate of all amounts by which, but for the limiting provision, the profits or gains arising to that spouse would have fallen to be reduced bears to the gross aggregate.

• (b) Any reference in this subsection to profits or gains does not include a reference to excepted profits or gains.

83 Treatment of premiums, etc., as rent.

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.

• (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:

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).

• (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—

• (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;