Income-tax (Fourth Amendment) Rules, 2011

NOTIFICATION NO. 19/2011 [F.NO. 142/3/2011-TPL]/S.O. 694(E)

DATED 5-4-2011

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (Fourth Amendment) Rules, 2011.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 5C,–

 (a)  the word "scientific", wherever it occurs, shall be omitted;

 (b)  in sub-rule (1) in clause (i) after the words, brackets and letters "clause (ii)", the words, brackets and letters "or clause (iii)" shall be inserted.

3. For the rule 5D of the said rules, the following rule shall be substituted, namely:–

"5D. Conditions subject to which approval is to be granted to a research association under clause (ii) or clause (iii) of sub-section (1) of section 35.–(1) The sole object of the applicant research association shall be to undertake scientific research or research in social science or statistical research as the case may be.

(2) The applicant research association shall carry on the research activity by itself.

(3) The research association seeking approval under clause (ii) or clause (iii) of sub-section (1) of section 35 shall maintain books of account and get such books audited by an accountant as defined in the Explanation to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.

(4) The research association shall maintain a separate statement of donations received and amount applied for scientific research or research in social science or statistical research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).

(5) The research association shall, by the due date of furnishing the return of income under sub-section (1) of section 139, furnish a statement to the Commissioner of Income-tax or Director of Income-tax containing–

  (i)  a detailed note on the research work undertaken by it during the previous year;

 (ii)  a summary of research articles published in national or international journals during the year;

(iii)  any patent or other similar rights applied for or registered during the year;

(iv)  programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme.

(6) If the Commissioner of Income-tax or the Director of Income-tax is satisfied that the research association,–

 (a)  is not maintaining books of account, or

 (b)  has failed to furnish its audit report, or

 (c)  has not furnished its statement of the sums received and the sums applied for scientific research or research in social science or statistical research or a statement referred to in sub-rule (5), or

 (d)  has ceased to carry on its research activities, or its activities are not genuine, or

 (e)  is not fulfilling the conditions subject to which approval was granted to it, he may after making appropriate enquiries furnish a report on the circumstances referred to in clauses (a) to (e) above to the Central Government within six months from the date of furnishing the return of income under sub-section (1) of section 139".

4. In Appendix II to the said rules, for Form No. 3CF-I, the following Form shall be substituted, namely:-

"FORM NO.3CF-I

[See rules 5C and 5D]

Application Form for approval under clause (ii) or clause (iii) of sub-section (1) of section 35 of the Income-tax Act, 1961 in the case of a research association

1. (i) Name and address of the registered office of the Association;

(ii) Enclose a copy of the Trust Deed/Deed of Registration/Memorandum and Articles of Association, and if the Association was approved earlier, furnish approval number and date of the latest notification [Please enclose a copy];

(iii) If approval was withdrawn in the past, mention reasons on account of which the approval was withdrawn [Enclose a copy of the Order/Orders withdrawing approval/approvals];

(iv) Date from which approval is sought for.

2. Legal status of the Association:

Whether Registered Society or Company or Others. (Enclose a copy of certificate of registration/incorporation)

3. Object of the research association.

4. (i) Address(es) of the research laboratory/ research facility of the Association;

(ii) Year of establishment;

(iii) Name and address of the Officer of the Association in-charge of the laboratory/research facility;

(iv) Total number of employees engaged in scientific, social or statistical research activity carried on by the Association.

5. List of research facilities or assets owned by the Association:

  (i)  Plant and machinery;

 (ii)  Land and building along with cost of acquisition;

(iii)  Any other research facility/asset with cost of acquisition.

6. Research subjects and projects undertaken by the Association:

  (i)  Research projects completed by the association during the last three years, if any;

 (ii)  Research projects, which have been taken up during the year and research projects which are underway from the past years;

(iii)   Research papers published in any eminent national or International Research Journal.

7. Other details of scientific research or research in social science or statistical research :

  (i)  New products, processes, methods, techniques developed;

 (ii)  Improvements in the existing products, processes, methods, techniques;

(iii)  Products of import substitution;

(iv)  Patents filed, obtained, if any, and if so, in whose name?

 (v)  Whether products, processes methods and techniques mentioned at (i) above have been commercialized or implemented and if so, by whom?

 (vi)  New theories/models developed;

(vii) New hypothesis which has been widely accepted;

(viii)Any copyright applied for/obtained;

(ix)  Earnings from patents or registered trademarks, if any.

8. Enclose details of seminars, conferences, workshops and training courses, etc., conducted by the Association during the last three years and a brief note regarding the relevance of such exchanges to the research area or activity carried on by the Association.

9. Programmes contemplated for research in future and financial projections to meet the likely expenditure on such programmes.

10. (i) Sources of income of the Association (for the last three years);

(ii) Indicate assessment particulars:

(PAN, Ward/Circle, if assessed to tax)

(iii) When was the last return of income furnished?

11. Amounts received by the research association and actually applied for research by it during the last three years:

12. Attach a list of donors giving their names, complete postal addresses and the amounts paid by each of them to the association during the last three years. (Mention PAN of donors paying the sums in excess of fifty thousand rupees)

13. Enclose the copy of audited annual accounts of the association for the last three years.

14. Investments made out of the amounts not utilised for research during the year mentioned at item 10 above:

  (i)  Fixed deposits with banks;

 (ii)  Fixed deposits with companies;

(iii)   Government securities;

 (iv)  Shares, Debentures, etc.;

  (v)  Cash in hand;

 (vi)  Others, if any, not covered under (i) to (v)

Certified that the above information is true to the best of my knowledge and belief.

Place ………………………….

Date ………………………….

Signature …………………………….

Designation ………………………….

Full Address ………………………….

ANNEXURE

To be furnished by a research association claiming exemption under section 10(21) Financial Year ………………………….

1. Total income of the Association including voluntary contributions received during the year.

2. Amount of income referred to at item 1 above that has been or deemed to have been applied wholly and exclusively for the objects of the Association.

3. Amount accumulated for the objects of the Association.

4. (i) Details of modes in which the funds of the association are invested or deposited showing nature, value and income from such investments or deposits.

(ii) Details of funds not invested in modes specified in section 11(5):

5. (i) Is the association carrying on any business (give details)?

(ii) Is the business incidental to the attainment of its object?

(iii) Are separate books of account maintained in respect of such business?

6. Details regarding the nature, quantity and value of contributions (other than cash and the manner in which such contribution have been utilised).

7. Details of shares, security or other property purchased by or on behalf of the association from:

  (i)  the founder of the association;

 (ii)  any person who has made a contribution exceeding rupees one lakh to the association;

(iii)   any member of a Hindu undivided family where the Hindu undivided family is a founder;

 (iv)  the manager (by whatever name called) of the association;

  (v)  a relative of the founder, member or the manager;

 (vi)  any concern in which any of the persons referred to in sub-items (i) to (v) have a substantial interest.

8. Whether any part of the income or any property of the association was used or applied, in a manner which results directly or indirectly in conferring any benefit, amenity or perquisite (whether converted into money or not) on any interested person. If so, the details thereof.

9. Amount deemed to be income of the association by virtue of section 11(3), as applicable by the first proviso to section 10(21).

Certified that the above information is true to the best of my knowledge and belief.

Place ………………………….

Date ………………………….

Signature …………………………….

Designation ………………………….

Full Address …………………………."