Page:Inland Revenue Ordinance, 1947 (Cap. 112).pdf/27

A.D. 1947]

(2) Where there are no sale, insurance, salvage or compensation moneys or where the amount of the capital expenditure of the person in question on the provision of the plant or machinery still unallowed as at the time of the event exceeds those moneys, a balancing allowance shall be made, and the amount thereof shall be the amount of the expenditure still unallowed as aforesaid or, as the case may be, the excess thereof over the said moneys.

(3) If the sale, insurance, salvage or compensation moneys exceed the amount, if any, of the said expenditure still unallowed as at the time of the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to the excess or, where the said amount still unallowed is nil, to the said moneys.

(4) Notwithstanding anything in the last preceding subsection, in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts, that is to say—
 * (a) the amount of the initial allowance, if any, made to him in respect of the expenditure in question;
 * (b) the amount of the annual allowances, if any, made to him in respect of the expenditure in question, including any allowance computed under section 38 (2) (ii) at a rate higher than that prescribed the Board of Inland Revenue.

40. Where machinery or plant in the case of which any of the events mentioned in subsection (1) of section 39 has occurred is replaced by the owner thereof and a balancing charge falls to be made on him by reason of that event or, but for the provisions of this section, would have fallen to be made on him by reason thereof, then, if by notice in writing to the Commissioner he so elects, the following provisions shall effect, that is to say—
 * (a) if the amount on which the charge would have been made is greater than the capital expenditure on providing the new machinery or plant—
 * (i) the charge shall be made only on an amount equal to the difference; and
 * (ii) no initial allowance, no balancing allowance and no annual allowance shall be made or allowed in respect of the new machinery or plant or the expenditure on the provision thereof; and