Clause 7

debit from that account such amount as would have been the chargeable income had the further deduction not been allowed or the amount of the credit in that account, whichever is the less; and

credit the amount debited under paragraph (a) to an account to be called a tax exempt account which shall be kept by the company for the purposes of this section, section 14C, 14E or 14J,and any remaining balance in the further deduction account shall be carried forward to be used by the company in the first subsequent year of assessment when the company has chargeable income had the further deduction not been allowed, and so on for subsequent years of assessment until the credit in the further deduction account has been fully used.(3C) Where a tax exempt account of a company is in credit at the date on which any dividends are paid by the company out of the amount credited to that account, an amount equal to those dividends or to that credit, whichever is the less, shall be debited to the tax exempt account.(3D) Section 13B(4) to (7) shall apply with such modifications as may be necessary in respect of any dividend paid out of the tax exempt account of the company.(3E) Notwithstanding anything in this section, where it appears to the Comptroller that in any year of assessment —

any further deduction which has been allowed under this section, section 14C, 14E or 14J; or

any dividend, including a dividend paid by a holding company, which has been exempted from tax in the hands of any shareholder,ought not to have been so allowed or exempted, as the case may be, the Comptroller may, within the year of assessment or within 12 years after the expiration thereof —

make such assessment or additional assessment upon the company or any such shareholder as may be necessary in order to make good any loss of tax; or

direct the company to debit its tax exempt account with such amount as the circumstances require.”.