Section 17
Balancing allowances and charges in respect of machinery or plant
(1)
Where, in or after the basis period for the first year of assessment under this Act, any of the following events occur in the case of any machinery or plant in respect of which an initial allowance or an annual allowance has been made for any year of assessment to a person carrying on a trade, profession or business, either —
(a)
the machinery or plant is sold, whether while still in use or not;
(b)
the machinery or plant is destroyed; or
(c)
the machinery or plant is put out of use as being worn out, obsolete or otherwise useless or no longer required, and the event in question occurs before the trade, profession or business is permanently discontinued, an allowance or charge (in this section referred to as a balancing allowance or a balancing charge) shall, in the circumstances mentioned in this section, be made to or on, as the case may be, that person for the year of assessment in the basis period for which that event occurs.
(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 allowed as aforesaid, or, as the case may be, the excess thereof over those moneys.
(3)
If the sale, insurance, salvage or compensation moneys exceed the amount, if any, of the expenditure still unallowed as at the time of the event, a balancing charge shall be made, and the amount on which it is made
Income Tax
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shall be an amount equal to the excess or, where the amount still unallowed is nil, to those moneys.
(4)
Notwithstanding anything in subsection (3), in no case shall the amount on which a balancing charge is made on a person exceed the aggregate of the following amounts —
(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 allowance, if any, made to him in respect of the expenditure in question, including any allowance computed under proviso of section 16(2) at a rate higher than that prescribed;
(c)
the amount of allowances, if any, allowed under sections 16B and 16C.