Clause 10

Notwithstanding anything contained in this Act, in computing the assessable income of any company for any year of assessment, no deduction shall be allowed for any loss incurred by that company (hereinafter referred to as “the loss company”) against any dividends received by it from an associated company:Provided that the Comptroller may allow such deduction if he is satisfied, having regard to all the circumstances of the case, that the object or one of the main objects of the declaration of dividends by the associated company to the loss company is not for the purpose of receiving any benefit or obtaining any advantage in relation to the application of this Act.(2) Subsection (1) of this section shall not apply —

in respect of any loss incurred by the loss company after the end of its accounting period during which the relevant date occurs; and

in respect of any dividends paid by the associated company out of the profits of the associated company derived after the end of its accounting period during which the relevant date occurs.(3) For the purposes of this section —

a company shall be deemed to be an associated company of a loss company if —

in the case of a private company at least twenty-five per cent of its issued capital is beneficially owned directly or indirectly by the loss company;

in the case of a public company at least fifty per cent of its issued capital is beneficially owned directly or indirectly by the loss company;

“the relevant date” means the date when the associated company first became an associated company of the loss company;

any dividends received by the loss company from an associated company, being dividends which are paid by the associated company out of income representing, wholly or in part, dividends paid by another associated company of the loss company to the first-mentioned associated company shall be deemed to be dividends received by the loss company from the second-mentioned associated company; and this provision shall apply notwithstanding any company or companies interposed between the first-mentioned associated company and the second-mentioned associated company.(4) For the purposes of paragraph (a) of subsection (3) of this section —

“private company” “public company” have the same meaning as in the Companies Act (Cap. 185);

where a loss company beneficially owns directly or indirectly a fraction of the issued capital of a second company which in turn beneficially owns directly or indirectly a fraction of the issued capital of a third company, the loss company shall be deemed to have a beneficial ownership of the issued capital of the third company equal to such fraction as results from the multiplication of those two fractions; and where the third company beneficially owns directly or indirectly a fraction of the issued capital of a fourth company, the loss company shall be deemed to have a beneficial ownership of the issued capital of the fourth company equal to such fraction as results from the multiplication of those three fractions, and so on.”.