Annual Audit of Accounts for Approved Programmes

Section 35(2AA)

Section 35 deals with scientific research

Section 35(2AA) states that where the assessee pays any sum to:

  • A National Laboratory
  • A University
  • Indian Institute of Technology 
  • A specified person with a specific direction

That the sum shall be used for scientific research undertaken under a programme approved in this behalf by the prescribed authority, then-

  • A deduction will be allowed of an amount equal to one and a half times of the sum so paid
  • no deduction in respect of such sum shall be allowed under any other provision of this Act

Provided that the prescribed authority before granting approval shall satisfy about the feasibility of carrying out scientific research and shall submit the Report to the Principal Chief Commissioner/Chief Commissioner/Principal Director General/Director General in such form as prescribed.

Provided that where the sum paid to such National Laboratory/University/IIT/specified person in P.Y. beginning on or after 01.04.2021, deduction will be equal to the sum so paid.

  • Deduction granted will not be denied on ground that –
      • The approval granted to such laboratory/specified person has been withdrawn
      • The programme undertaken by the Laboratory/university/IIT/specified person has been withdrawn.

Rule 6(7)(h) states that a copy of audited statement of accounts for the approved programme shall be submitted by the Head of the National Laboratory, University or Indian Institute of Technology [or the Principal Scientific Adviser to the Government of India] to the [Principal Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over the sponsor] within six months of the completion of the programme.

Rule 7A(c) states that the company shall maintain a separate account for each approved facility; which shall be audited annually and [a report of audit in Form No.3CLA shall be furnished electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in Explanation 2 to sub-section (1) of section 139 of the Act for furnishing the return of income, for each succeeding year.

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