‘Agricultural extension’ is defined by www.wikipedia.org as general term meaning the application of scientific research and new knowledge to agricultural practices through farmer education. The field of 'extension' now encompasses a wider range of communication and learning activities organized for rural people by educators from different disciplines, including agriculture, agricultural marketing, health, and business studies.
Section 35CCC of the Income Tax Act, 1961 deals with the expenditure on agricultural extension project. The said section provides that where an assessee incurs any expenditure on agricultural extension project notified by the Board in this behalf in accordance with the guidelines as may be prescribed, then, there shall be allowed a deduction of a sum equal to one and one-half times of such expenditure. Where a deduction under this section is claimed and allowed for any assessment year in respect of any expenditure as above, deduction shall not be allowed in respect of such expenditure under any other provisions of this Act for the same or any other assessment year.
The Central Board of Direct Taxes in exercise of the powered by Section 295 of the Income Tax Act, 1961 read with Section 35CCC(1) vide Notification dated 30.05.2013 amended the Income Tax Rules 2013 which is the fourth amendment. In this Rule 6AAD and Rule 6AAE after Rule 6AAC. Rule 6AAD deals with guidelines for approval of agricultural extension project under Section 35CCC. Rule 6AAE stipulates the conditions subject to which an agricultural extension project is to be notified under Section 35CCC.
GUIDELINES FOR APPROVAL
The agricultural extension project shall be considered for notification if it fulfills all the following conditions:
- The project shall be undertaken by an assessee for training education and guidance of farmers;
- The project shall have approval of the Ministry of Agriculture, Government of India; and
- The expenditure (not being expenditure in the nature of cost of any land or building) exceeding an amount of Rs.25 lakhs is expected to be incurred for the project.
The following is the procedure:
- An assessee, before undertaking any agricultural extension project, shall make an application for notification under Section 35CCC(1) of the Income Tax Act, 1961, in Form 3C-O, in duplicate, to the Commissioner of Income tax or the Director of Income Tax, as the case may be, having jurisdiction over the assessee;
- The application shall be accompanied by-
- A detailed note on the agricultural extension project to be undertaken by the assessee;
- Details of the expenditure expected to be incurred on the project and expected date of completion of the project; and
- A letter approving the project and specifying the amount of expenditure expected to be incurred on the project from the Ministry of Agriculture, Government of India.
- A copy of the same is to be sent to the Member (IT), Central Board of Direct Taxes accompanied by the acknowledgement receipt, as evidence of having furnished the application form in duplicate, in the office of the Commissioner or the Director, as the case may be, having jurisdiction over the case;
- If any defect is noticed in the application or if any relevant document is not attached the authority shall before the expiry of one month from the date of receipt of the application in the office intimate the defect to the applicant for its rectification;
- The applicant shall remove the defect within a period of 15 days from the date of such intimation or within such other period which, on an application made in this behalf, as may be extended by the Authority, so however that the total period of removal of defect does not exceed 30 days;
- If the rectification has not been made within the time specified, the authority shall send his recommendation for treating the application as invalid to CDBT;
- On receipt of the recommendation, the CBDT, if satisfied, may pass an order treating the application as invalid;
- If the application is complete in all respect the authority may send its recommendation to the CBDT for grant of approval or rejection of the application before the expiry of the period of 2 months to be reckoned from the end of the month in which the application form complete in all respects were received in his office;
- The CDBT may call for such documents from the assessee, as it considers necessary and may also get any inquiry made for verification of the genuineness of the activities of the assessee;
- The CBDT may, within a period of 3 months from the end of the month in which it receives the report from the Authority, issue a notification in Form – 3CP to be published in the Official Gazette specifying the agricultural extension project subject to conditions in Rule 6AAE or such other conditions, as it may deem fit, to be effect for such period not exceeding three assessment years or pass an order rejecting the application.
- If the CBDT is satisfied with the activities of the agricultural extension project during the period of notification, it may notify the said project for a further period;
- A copy of the notification shall be sent t-
- The applicant;
- Ministry of Agriculture, Government of India;
- The Commissioner of Income Tax or the Director of Income tax, as the case may be;
- The Department of Agriculture of the concerned state;
- Agricultural Technology Development Agency (ATMA) of the concerned District(s).
- The CBDT may rescind the notification at any time, if it is satisfied that the assessee has ceased its activities or its activities are not genuine or not being carried out in accordance with all or any of the relevant provisions of the Act or this rule or Rule 6AAE or are not being carried out in accordance with all or any of the conditions subject to which the notification was issued;
- An order rejecting the application is invalid or rejecting or rescinding the Notification shall not be passed unless the assessee has been given an opportunity of being heard in the matter;
- A copy of any order invalidating or rejecting the application or rescinding the notification shall be sent to all as noted above;
CONDITIONS
Rule 6AAE stipulates the following conditions:
- The assessee shall maintain separate books of account of the agricultural extension project and get such books of account audited by an accountant as defined in the Explanation below Section 288(2);
- The audit report shall include the comments of the auditor on the true and fair view of the books of account maintained for agricultural extension project, the genuineness of the activities of the agricultural extension project and fulfillment of the conditions specified in the relevant provisions of the Act or the rules or the conditions mentioned in the Notification;
- The assessee shall not accept an amount exceeding an amount as approved in the Notification from the beneficiary under the eligible agricultural extension project for training, education, guidance or any material distributed for the purpose of such training, education or guidance;
- The assessee shall not get any direct or indirect benefit from the Notified project except the deduction of the eligible expenditure in accordance with the provisions of Section 35CCC of the Act, rule 6AAD and Rule 6AAE;
- All expenses, not being expenditure in the nature of cost of any land or building, as reduced by the amount received from the beneficiary, if any, incurred wholly and exclusively for undertaking an eligible agricultural extension project shall be eligible deduction under Section 35CCC. Any expenditure incurred which is reimbursed whether directly or indirectly shall not be eligible for deduction under Section 35CCC;
- The assessee shall, on or before the due date of furnishing the return of income under Section 139(1) furnish the following to the Commissioner of Income tax or Director of Income tax, as the case may be-
- The audited statement of accounts of the agricultural extension projects for the previous year along with the audit report and amount of deduction claimed under Section 35CCC(1);
- A note on the project undertaken by it during the previous year and the program of the project to be undertaken during the current year and the financial allocation for such program; and
- A certificate from the Ministry of Agriculture, Government of India regarding the genuineness of the project undertaken by the assessee during the previous year.
- If the Authority is satisfied that the-
- Assessee has not maintained separate books of account for the agricultural extension project or has not got such books of account audited by an accountant;
- The assessee has not furnished the documents;
- The assessee has ceased to carry out activities of agricultural extension project;
- The activities of the project are not genuine; or
- Activities of the project are not being carried out in accordance with the relevant provisions of the Act or the rules or the conditions subject to which the notification was issued,
he may, after making appropriate inquiries, furnish a report to the CBDT for appropriate action.
