CHAPTER III
DIRECT TAXES
Income-tax
Amendment of section 35.
9. In section 35 of the Income-tax Act, with effect from the 1st day of April, 2011,—
(i) in sub-section (1),—
(a) for the words "scientific research association", wherever they occur, the words "research association" shall be substituted;
(b) in clause (ii), for the words "one and one-fourth", the words "one and three-fourth" shall be substituted;
(c) in clause (iii),—
(A) for the words "any sum paid to a university", the words "any sum paid to a research association which has as its object the undertaking of research in social science or statistical research or to a university" shall be substituted;
(B) in the proviso, for the words "such university", at both the places where they occur, the words "such association, university" shall be substituted;
(ii) in sub-section (2AA), in clause (a), for the words "one and one-fourth", the words "one and three-fourth" shall be substituted;
(iii) in sub-section (2AB), in clause (1), for the words "one and one-half", the word "two" shall be substituted.
Notes on Clauses:
Clause 9 of the Bill seeks to amend section 35 of the Income tax Act relating to expenditure on research.
Sub-clause (i) of clause 9 seeks to amend sub-section (1) of the aforesaid section 35.
The existing provisions contained in clause (ii) of sub-section (1) of the said section provide for weighted deduction to the extent of one hundred twenty-five per cent. of any sum paid to a scientific research association which has the object of undertaking scientific research or to a university, college or other institution to be used for scientific research.
Item (b) of sub-clause (i) proposes to amend the said clause (ii) so as to enhance the said weighted deduction from one hundred and twenty-five per cent. to one hundred and seventy-five per cent.
Clause (iii) of sub-section (1) of the aforesaid section provides that weighted deduction shall be allowed in respect of contributions made to an approved university, college or institution to be used for research in social science or statistical research.
Item (c) of sub-clause (i) proposes to amend clause (iii) of the aforesaid sub-section to include research associations, which have as their object, undertaking of research in social science or statistical research provided such research associations are approved and notified. Accordingly, any sum paid to such research associations shall be eligible for weighted deduction.
Sub-clause (ii) of clause 9 seeks to amend sub-section (2AA) of the aforesaid section 35.
The existing provisions contained in clause (a) of sub-section (2AA) of the said section provide for a weighted deduction to the extent of one hundred and twenty-five per cent. of any sum paid to a National Laboratory or a University or an Indian Institute of Technology or a specified person for the purpose of an approved scientific research programme.
It is proposed to amend the said clause (a) so as to enhance the said weighted deduction from one hundred and twenty-five per cent. to one hundred and seventy-five per cent.
Sub-clause (iii) of clause 9 seeks to amend sub-section (2AB) of the aforesaid section 35.
The existing provisions contained in clause (1) of sub-section (2AB) of the said section provide for weighted deduction of one hundred and fifty per cent. of the expenditure incurred by a company on scientific research on an approved in-house research and development facility.
It is proposed to amend the said clause (1) so as to enhance the said weighted deduction from one hundred and fifty per cent. to two hundred per cent.
These amendments will take effect from 1st April, 2011, and will, accordingly, apply in relation to the assessment year 2011- 2012 and subsequent years.
