Section 35(i)(ii) - sum paid to a scientific research association - weighted deduction of 1 1/3 times in the hands of contributors to sponsored research programmes approved by the prescribed authority u/s 35(2A). - Income Tax - 896/CBDT

INSTRUCTION NO. 896/CBDT Dated : November 4, 1975 Section(s) Referred: 35(1)(ii) ,35(1)(iii) Statute: Income - Tax Act, 1961 Reference is invited to Section 35(1)(ii) of the Income-tax Act, 1961 which provides that any sum paid to a scientific research association which has as its object the undertaking of scientific research or to a University, College, or other institution, to be used for scientific research will be allowed as deduction provided that such association, university, college or institution is for the time being approved for the purposes of this clause by the prescribed authority. Under section 35(1) (iii) any sum paid to a university, college or other institution to be used for research in social science or statistical research related to the class of business carried on, being a university, college or institution will be allowed as deduction provided such institution is for the time being approved for the purposes of this clause by the prescribed authority. The Income of the institutions approved u/s 35(1) (ii) is specifically exempt from Income-tax u/s 10(21) which is applied solely to the purposes of that association. Now a provision has also been made for giving benefit of weighted deduction of 1 1/3 times in the hands of contributors to sponsored research programmes approved by the prescribed authority u/s 35(2A). 2. Approval u/s 35(1) (ii) (iii) is granted on the basis of the recommendation of the prescribed authority enumerated in rule 6 of the Income-tax Rules, 1962. A list of institutions approved so far in this connection is enclosed (Annexure). 3. It would be seen from the above that under the Income-tax Act various benefits are allowed to these research institutions and to their contributors. However, this benefit can be availed of by these approved research institutions and their contributors only if the income is applied solely for the purposes of such institution, that is, carrying on scientific research or research in social science etc. 4. Generally the institutions are approved by the prescribed authority in the first instance for a limited period only and a periodical review of the work done by them and the manner in which the funds are utilised is undertaken by the prescribed authority to see whether the approval given should be withdrawn or it should be continued. 5. The Board desire that the Income-tax Officers should examine the annual accounts of these research institutions by issue of notice u/s 139(2) to see whether the funds received have been utilized in carrying on the scientific research. In case any deviation is noticed, it may be referred to the prescribed authority for decision u/s 35(3) of the Income-tax Act through the Board. 6. A review of the accounts of the institutions in your charge may be undertaken and a report as to the result of review may kindly be sent to the Board by 31st January, 76.