Page:Inland Revenue Ordinance, 1947 (Cap. 112).pdf/15

A.D. 1947]

20. Where a loss is incurred by any person in the basis period for any year of assessment in any trade, profession or business the amount of such loss attributable to activities in the Colony shall be carried forward and shall, subject as hereinafter provided, be set off against what would otherwise have been the chargeable profits of that person for the next five years in succession; provided that the amount of any such loss allowed to be set off in computing the chargeable profits in any year shall not be set off in computing the chargeable profits of any other year:

Provided that where all the members of a person not being a body corporate have elected to be severally assessed under the provisions of Chapter VII the portions of any loss incurred in the basis period for any year of assessment of any trade, profession or business falling on a member shall first be set off against the other income of that member. If the amount of the loss falling on a member cannot be wholly set off against his other income for the year of assessment following the year in which it was incurred the amount of the loss not so set off shall be set off against what would otherwise have been his chargeable income for the next five years in succession, provided that the amount of such loss allowed to be set off in computing the chargeable income for any year shall not be set off in computing the chargeable income of any other year.

21. (1) For the purposes of this section—
 * (a) a person is closely connected with another person where the Commissioner in his discretion considers that such persons are substantially identical or that the ultimate controlling interest of each is owned or deemed under this section to be owned by the same person or persons;
 * (b) the controlling interest of a company shall be deemed to be owned by the beneficial owners of its shares, whether held directly or through nominees, and shares in one company held by or on behalf of another company shall be deemed to be held by the shareholders of the last-mentioned company.

(2) Where a non-resident person carries on business with a resident person with whom he is closely connected and the course of such business is so arranged that it produces to the resident person either no profits or less than the ordinary profits which might be expected to arise, the business done by the non-resident person in pursuance of his connection with the