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15 1947

FINANCE ACT, 1947

FIFTH SCHEDULE.

Rules for ascertaining, in relation to each class of trading stock held for the purposes of a trade or business on the 31st day of december, 1946, the sum realised by sales of trading stock of that class during the sales period.

Section 16 .

1. References in this Schedule to trading stock of a particular class shall be construed as including references to all trading stock of that class in whatever stage of manufacture.

2. There shall be ascertained, in relation to each particular class of trading stock held for the purposes of the trade or business on the 31st day of December, 1946, the sum realised by sales of trading stock of that class during the sales period, and for this purpose the following provisions shall have effect:—

(1) where any stock of that class is sold at a price lower than that which it would have fetched if sold in the open market, it shall be treated as if it had been sold at the price which it would have fetched if sold in the open market,

(2) subject to sub-rule (3) of this Rule, account shall be taken of all stock of that class sold during the sales period,

(3) where the quantity of trading stock of that class sold during the sales period exceeds the quantity of trading stock of that class held on the 31st day of December, 1946, no account shall be taken of any sales of trading stock of that class effected during the sales period after the time when the quantity of trading stock of that class so sold equals the quantity of trading stock of that class held on the 31st day of December, 1946,

(4) where the quantity of trading stock of that class sold during the sales period is less than the quantity of trading stock of that class held on the 31st day of December, 1946—

(a) (i) a quantity of trading stock of that class equal in quantity to the difference shall be deemed to have been sold on the last day of the sales period at the price which it would have fetched if it had been sold in the open market on the said last day,

(ii) if the trading stock of that class held on the last day of the sales period is not all at the same stage of manufacture, then the stock, deemed under sub-paragraph (i) of this paragraph, to have been sold on the said last day, shall be the stock held on the said last day which is at the most advanced stage of manufacture;

(b) if the trading stock of that class held on the 31st day of December, 1946, consists of stock in different stages of manufacture, the quantity of stock of that class sold during the sales period shall be deemed to consist of that part of the stock of that class which on the 31st day of December, 1946, was completely or most nearly completely manufactured.

3. Where trading stock of any particular class sold or treated as sold which is taken into account for the purposes of Rule 2 of this Schedule has passed through a further process of manufacture than that undergone by the trading stock of that class held on the 31st day of December, 1946, the sum realised or treated as realised by sales of trading stock of that class as ascertained under the said Rule 2 shall be reduced to a sum which bears to such first-mentioned sum the same proportion as the aggregate of the cost or replacement cost, whichever is the lower, of each of the several items comprising that class and held on the 31st day of December, 1946, bears to the amount of that aggregate increased by the cost involved in the further process of manufacture.