(1) Subject to subsection (4), where deductions allowable to any person for any year of income under the provisions of this Division other than this section, exceed the assessable income from the source to which these deductions relate, the amount of such excess is allowed as a deduction against income accruing from other sources of income for that year of income except exempt income.
(2) Subject to subsection (4), where, after the allowance of any deduction to which the person may be entitled under subsection (1), an excess still remains, the amount of such excess (herein referred to as “the assessed loss”) is allowed as a deduction in ascertaining the assessable income of subsequent years of income to the extent provided in subsection (3).
(3) The deduction provided in subsection (2) shall not exceed 1/2 of the assessable income of the next subsequent year of income ascertained in accordance with this Part but before the operation of subsection (2) (in this section referred to as “the relevant assessable income”) and where the assessed loss exceeds 1/2 of the relevant assessable income or there is no such income of such year of income, the excess or the amount of the assessed loss, as the case may be, is to be carried forward and deducted in like manner in ascertaining the assessable income of the next following 5 years of income or until the assessed loss has been fully allowed, whichever is the earlier.
(4) Where, for any year of income during the tax holiday period of any person whose exemption relates to income accruing in respect of—
(a) a hotel; or
(b) an enterprise approved under the Fiscal Incentives Act,
the deductions which would have been allowable under the provisions of this Act other than this section, exceed any amount which would have been assessable income if that person had not been exempt from tax, then the amount of such excess shall be treated as an assessed loss allowable as a deduction in succeeding years in the manner provided in subsection (3) but, save as provided, no other loss incurred in relation to the production of exempt income shall be allowed as a deduction.
(5) Despite the provisions of this section, no deduction shall be allowed in respect of any loss arising from the carrying on of any business where, in the opinion of the Comptroller, such business was not carried on a commercial basis and with a view to the realisation of gains or profits.
(6) For the purposes of subsections (2) and (3) an assessed loss is considered to include a loss incurred under the corresponding provision of the previous Act, and any losses brought forward in respect of years of income prior to 1988 shall be treated in like manner as if they were an assessed loss for the year of income 1988.