Section 42 Cancellation costs.C1

The provisions of sections thirty-seven, thirty-nine and section forty-one of this Act, shall, with the modifications hereinafter mentioned, apply in relation to cancellation costs as they apply in relation to rehabilitation costs.

In this section the expression “cancellation costs” means, in relation to the person carrying on a trade or business, payments by him in consideration of the termination, whether by agreement or otherwise, of any contract for the supply of goods or materials, the rendering of services or the hire of machinery to the person carrying on the trade or business, or of the surrender by that person of any lease, where the contract is terminated or the lease is surrendered as a consequence of the termination, whether by agreement or otherwise, of a contract for the provision by that person of goods or services for the purposes of the war.

The proviso to subsection (2) of the said section thirty-seven shall not apply in relation to cancellation costs, but if the person making the claim produces to the Commissioners before the end of March nineteen hundred and forty-eight particulars of contracts or leases which, as at the thirty-first day of December, nineteen hundred and forty-six, were expected to be terminated as aforesaid or surrendered by him and satisfies them that it was necessary for the termination or surrender to be deferred beyond the end of the year nineteen hundred and forty-seven, the Commissioners may treat the period mentioned in the said subsection (2) as extended, in relation to any cancellation costs incurred in consideration of the termination or surrender of the contracts or leases, until the end of the year nineteen hundred and forty-eight or, if the circumstances so require, until such later date as the Commissioners may allow, being a date not later than the end of the year nineteen hundred and forty-nine.

Where a person carrying on a trade or business who incurs cancellation costs also receives sums in consideration of the termination, whether by agreement or otherwise, of contracts for the provision by him of goods or services for the purposes of the war, the sums so received by him shall, except in so far as they go to increase the profits of the trade or business for any chargeable accounting period or are taken into account for the purposes of the proviso to subsection (3) of the said section thirty-seven or the proviso to subsection (1) of the said section forty-one be applied in reducing for the purposes of this section, first, the cancellation costs in respect of which relief would otherwise be granted under the said section thirty-seven and, in so far as they are not so applied, in reducing the cancellation costs in respect of which relief would otherwise be granted under the said section forty-one.