Coral Limited carries on a manufacturing business in Hong Kong whose profits are chargeable to Hong Kong profits tax. For the financial year ended $31$ March $2022,$ it reported an accounting profit of $$7,530,000.$ This accounting profit was arrived at after taking into account the following expenses:

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Expenses:

Bad debts and other provisions $3101,900$

Depreciation$414,000$

Donations$470\mathrm{.}000$

Interest expenses$5496,600$

Repairs and maintenance$6419,000$

Research and development$71,284,800$

Traffic fines$3,000$

Profits tax$450,000$

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Notes to the accounts:

$1.$ Exchange differences:

a$.$ Unrealised gains on translation of trade receivables at year end$27,400$

b$.$ Gain on conversion of foreign currency time deposits$113,500$

c$.$ Loss on settlement and collection of trade receivables$(16,800)$

$124,100$

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$2.$ Investment income:

a$.$ Dividends from a subsidiary in Taiwan$500,000$

b$.$ Gain on trading in securities listed on the Hong Kong

$$ i$.$ Stock exchange$273,500$

c$.$ Interest on deposits placed with HSBC bank, Singapore branch$63,000$

d$.$ Interest on tax reserve certificates$3,000$

$839,500$

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$3.$ Bad debts and other provisions:

a$.$ General provision for slow$-$moving stock$56,200$

b$.$ Allowance for doubtful accounts estimated at $2\%$ of

the trade receivables outstanding at year end$27,000$

c$.$ Trade debts written off$18,700$

$101,900$

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$4.$ This comprises a cash donation of $$50,000$ to the Community Chest and $$20,000$ incurred on the purchase of face masks for donation to Banyan Services Association. Both organizations are charitable institutions approved by the Commissioner of Inland Revenue $($CIR$)$ under section $88$ of the Inland Revenue Ordinance.

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$5.$ Interest expenses:

a$.$ Interest paid to Hang Seng Bank$178,100$

b$.$ Interest paid to HSBC bank$268,500$

c$.$ Interest paid to Richard Lam$50,000$

$496,600$

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The banking facilities with Hang Seng Bank and HSBC bank were used to finance the company's business operations in Hong Kong. The banking facilities with Hang Seng Bank were secured by a property owned by the company, while those with HSBC bank were secured by the deposits placed with that bank's Singapore branch $($see note $2$ above$).$ The outstanding balance of the money borrowed was more than the amount of deposits at all material times.

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The loan borrowed from Richard Lam, a friend of a director of the company, was used wholly and exclusively for the purchase of manufacturing machines used in Hong Kong The loan was unsecured. The money lent was from Richard's personal funds.

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$6.$ Repairs and maintenance:

a$.$ Maintenance fees for machines and equipment$283,300$

b$.$ Repair works in the factory$110,700$

c$.$ Reinstatement cost of a leased premises