"(ee) the interest accruing to any person on moneys invested in Reconstruction Bonds issued by the Government of Sri Lanka denominated in United Stales Dollars ; "

(eee) the interest accruing to any person on moneys invested in Sri Lanka Development Bonds denominated in United States Dollars issued by the Central Bank of Sri Lanka on or after April 1,2001;"

"(d) the aggregate amount of the capital gains of any person for any year of assessment commencing on or after April 1, 2002 arising from any transaction stipulated in section 7.".

(1) The profits and income within the meaning of paragraph (a) of section 3 (other than any profits and income from the sale of capital assets) of any company from any specified undertaking referred to in subsection (2) and carried on by such company on or after April 1, 2002 shall be exempt from income tax for a period of three years reckoned from the commencement of the year of assessment in which the undertaking commences to carry on commercial operations.

(2) For the purposes of subsection (1) "specified undertaking" in relation to a company means an undertaking carried on by such company and which is engaged in-"

For the purpose of this subsection

(1) The profits and income within the meaning of paragraph (a) of section 3 (other than any profits and income from, the sale of capital assets) of any company from any specified undertaking referred to in subsection (2) shall be exempt from income tax for a period not less than five years but not more than ten years as may be determined by the Minister by Order published in the Gazette, if the amount of the investment made by such company in such undertaking is not less than one thousand two hundred and fifty million rupees. Such period shall be reckoned from the commencement of the year of assessment in which the undertaking commences to carry on commercial operations.

(2) For the purposes of subsection (1) "specified undertaking" in relation to company means an undertaking carried on by such company on or after April 1, 2002 and which is engaged in any such activity relating to infrastructure development as may be determined by the Minister by Order published in the Gazette, having regard to the interests of the national economy.".

"(vi) any computer hardware acquired by such person on or after April 1, 2002 and arising out of its use in any trade, business, profession or vocation carried on or exercised by him at the rate of one hundred per centum on its cost of acquisition;";

"(c) A sum equal to -"

"(cc) a sum equal to one-fourth of any payment made by such person in any year of assessment commencing on or alter April 1, 2002 in the acquisition of any intangible asset such as a patent, copyright or trade mark (other than any goodwill) used by him in any trade or business carried on by him :

Provided that no deduction shall be allowed to any person under this paragraph in respect of any such payment if the total of the sum deducted in the preceding years of assessment is equal to the amount of such payment ; ";

(i) in the case of the year of assessment commencing prior to April 1,2002, an amount equal to fifty per centum ;

(ii) in the case of every year of assessment commencing on or after April 1, 2002, an amount equal to one hundred per centum,

(i) for any year of assessment commencing prior to April 1. 2002, not exceed ten per centum ;

(ii) for any year of assessment commencing on or after April 1, 2002, insofar as it relates to the repairs of such premises, not exceed twenty-five per centum,

"(kk) the expenditure including capital expenditure incurred in any year of assessment commencing on or after April 1, 2002 by such person in carrying on any scientific, industrial, agricultural or any other research for the upgrading of any trade or business carried on by such person;";

(a) in sub-paragraph (iii) of paragraph (c) of that subsection by the substitution for the words "in accordance with such paragraph," of the following :-"

"in accordance with such paragraph :

Provided that a deduction may be allowed in respect of any expenditure incurred, by such person in any year of assessment commencing on or after April 1, 2002 if such expenditure incurred in traveling outside Sri Lanka is directly related to any trade, business, profession or vocation carried on, or exercised by such person. ; " ;

(b) in sub-paragraph (ii) of paragraph (d) of that subsection, by the substitution for the words "accordance with the provision of such paragraph;", of the following :-"

"accordance with the provisions of such paragraph :

Provided that at deduction may be allowed in respect of any such expenditure incurred by such person in any year of assessment commencing on or after April 1, 2002, if such expenditure incurred in traveling outside Sri Lanka is directly related to the carrying on of such business;";

(c) in paragraph (f) of that subsection by the substitution for the words "exercised by him;" of the following :-"

"exercised by him :

Provided that a deduction may be allowed in respect of such entertainment expenses incurred by such person or on his behalf, in any year of assessment commencing on or after April 1, 2002, if the expenses so incurred are directly related to any trade, business, profession or vocation carried on, or exercised by such person;";

(d) in paragraph (f) of that subsection, by the substitution, for the words "his executive officer", of the words "his executive officer, in any year of assessment commencing prior to April 1. 2002": and

"(1A) The assessable income of a person (other than a company) for any year of assessment commencing on or alter April 1, 2002, shall notwithstanding anything contained in Inland Revenue (Amendment) 11 Act. No. 10 of 2002 subsection (1), be his total statutory income for that year other than the -"

subject to the deductions, specified in this section :

Provided however, where such income from interest or dividends from which income tax has been deducted under section 122A or subsection (1A) of section 61, as the case may be, have been received by a person in the course of carrying on any trade or business as a receipt from such trade or business, such income from interest or dividends shall form part of the total statutory income of such person.":

(a) of that subsection for the words "payable by such person", of the words "payable for that year of assessment being a year of assessment commencing prior to April 1, 2002 by such person.";

(b) by the insertion, immediately after paragraph (a) of that subsection of the following :-"

(i) one hundred and forty four thousand rupees, in respect of every year of assessment commencing prior to April 1, 2002; or

(ii) two hundred and forty thousand rupees, in respect of every year of assessment commencing on or after April 1,2002 ; ";

(a) in paragraph (h) of that subsection by the substitution for the words "projection on a screen in a cinema."; of the words "projection on a screen in a cinema ;";

(b) by the addition, immediately after paragraph (h) of that subsection, of the following paragraphs :-

(a) in sub-paragraph (v) of that paragraph by the substitution for the words "twenty five thousand rupees", of the words "twenty-five thousand rupees ;";

(b) by the insertion immediately after sub-paragraph (v) of that subsection of the following sub-paragraph :-

(a) by the substitution, for the words and figures, 'Part III of the First Schedule", of the words and figures "Parts III and IIIA of the First Schedule";

(b) in the proviso to that subsection by the substitution for all the words from "such sum", to the end of that proviso, of the words "such sum shall be chargeable with income tax in the manner provided for in subsection (3) as if the references in that subsection to 'capital gain' were references to 'such sum'; Insertion of new sections 40A and 40B of the principal enactment.

(1) Where the taxable income of any company carrying on the business of a specialized housing bank for any year of assessment commencing on or after April 1. 2002 includes any profits and income within the meaning of paragraph (a) of section 3 from such business such part of such taxable income as consists of such profits and income, shall, notwithstanding anything to the contrary in this Act, be chargeable with income tax at the rate of twenty per centum.

(2) For the purposes of this section "specialized housing bank" means a licensed commercial or specialized bank within the meaning of the Banking Act, No. 30 of 1988 which is engaged in lending money only for activities relating to residential housing.

(1) The profits and income within the meaning of paragraph (a) of section 3 of any company referred to in section 21 B for any year of assessment commencing after the expiry of the period during which the profits and income of such company were exempt from income tax shall, notwithstanding anything contained in this Act, be chargeable with income tax at the rate of fifteen per centum.

(2) The profits and income within the meaning of paragraph (a) of section 3 of any company referred to in section 21A, shall notwithstanding anything containing in this Act, for -

"(bb) equal to ten per centum of the aggregate amount of the gross dividends distributed by such company in that year of assessment; being an year of assessment commencing on or after April 1, 2002 out of the profits on which the taxable income of such company is computed for any year of assessment ;";

"(1A) Every resident company, shall be entitled to deduct from the amount of any gross dividend payable to any shareholder, on or after April 1, 2002. in the form of money or an order to pay money out of profits on which the taxable income of that company is computed for any year of assessment, income tax equal to ten per centum."; and

(1) Every bank or financial institution shall, subject to the provisions of this Chapter, deduct at the time of payment, from the interest payable by it in any year of assessment commencing on or after April 1, 2002, on any sum of money -

income tax at the rate of ten per centum on the total amount of the interest earned on such deposit:

Provided however, the provisions of this section shall not apply in respect of a institution certified by the Commissioner - General, as a charitable institution on any interest which is not in excess of twelve thousand rupees per month or one hundred and forty four thousand rupees a year accruing to such institution on any deposit:

Provided further that where a person or a partnership requests in writing to a bank or financial institution to deduct income tax at the rate often per centum from any interest payable to such person or partnership in any year of assessment, on a sum of money deposited by such person or partnership with such bank or financial institution, then such bank or financial institution shall comply with such request notwithstanding that the interest payable on such sum of money for that year of assessment is less than seventy two thousand rupees.

(2) For the purposes of a deduction under this section -

(3) Where the Commissioner-General is satisfied that any bank or financial institution has devised a method to contravene the provisions of subsection (1) as regards the deduction of tax. the Commissioner-General may impose on such bank or financial institution a penalty of a sum equivalent to five hundred per centum of the tax avoided by the use of such method.

For the avoidance of doubt it is hereby declared that "deduct at the time of payment from the interest payable" in subsection (1) shall include any amount of interest credited to any account.".

(c) in relation to any year of assessment commencing on or after April 1, 2002, means any sum or sums aggregating to not less than-"

payable by any specified person in that year of assessment to any person or partnership in consideration of services rendered by that person or partnership as the case may be, in the course of any business, profession, vocation or other activities of an independent character carried on or exercised by that person or partnership, as the case may be, and includes any commission, brokerage or other sums of like nature payable by such specified person, but does not include any sum payable by such specified person to any employee of such specified person in the course of employment under such specified person or any rent or other payment payable for the use or occupation of any specified land or building as defined in subsection (2) of section 131B.".

(1) The provisions of Chapter XV the provisions relating to the deduction of income tax from of Chapter interest paid by banks and financial institutions, XV to this Chapter credit for income tax so deducted, duties of banks and financial institutions, default in the deduction of income tax, issue of assessments on banks and financial institutions, appeals and penalty for default shall, mutatis mutandis apply to the deduction of income tax from such rent, lease rent or other payments as is mentioned in section 131A, credit for income tax so deducted, duties of persons liable to pay such rent, lease rent, or other payment, default in the deduction of income tax, issue of assessments on such persons, appeals and penalty for default under this Chapter, as if there were substituted in Chapter XV for the words "banks and financial institutions" of the words "persons liable to pay such rent, lease rent or other payment" and for the word "interest" of the words "rent, lease rent or other payment" wherever they appear in that Chapter, subject however, to the modification that credit for income tax deducted under the provisions of this Chapter by any person from any rent, lease rent or any other payment paid to any co-owners of such property shall be apportioned among such co-owners in proportion to their rights of ownership in such properly.

(2) For the purposes of this Chapter-"

"specified land or building" means a land or building in respect of which the amount of rent, lease rent or other payment payable for any calendar month or part thereof is not less than fifty thousand rupees or the aggregate rent, lease rent or other payment payable for any year is not less than five hundred thousand rupees.".