Statement under Rule 5D and 5E

Related to Section 35 of Income Tax Act, 1961

Rule 5D: Conditions subject to which approval is to be granted to a research association under Section 35(1)(ii),(iii)

The sole object of applicant research association shall be to undertake scientific research or research in social science or statistical research
The applicant research association shall carry on the research activity by itself.
The research association seeking approval u/s 35(1)(ii),(iii) shall maintain books of account and get the same audited by CA and furnish the Report to the CIT/DIT by due date as per Section 139(1)
The research association shall maintain a separate statement of donations received and amount applied for research and a copy of it to be certified by auditor and submitted with the Report as refered to above
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—

1. 1. detailed note on the research work undertaken by it during the previous year
  2. summary of research articles published in national or international journals during the year
  3. any patent or other similar rights applied for or registered during the year;
  4. programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme

If CIT/DIT is satisfied that the research association-

- - Is not maintaining books of account
  - Failed to furnish audit report
  - Not furnished the statement of the sums received and the sums applied for in research
  - has ceased to carry on its research activities, or its activities are not genuine
  - is not fulfilling the conditions subject to which approval was granted to it,

furnish a Report to the Central government after enquiries within 6 months of date of furnishing of return of income u/s 139(1)

Rule 5E: Conditions subject to which approval is to be granted to a University, College or other institution under Section 35(1)(ii)(iii)

The sum paid to a university, college or other institution shall be used for scientific research and research in social science or statistical research.
The applicant university, college or other institution shall carry out scientific research, research in social science or statistical research through its faculty members or its enrolled students.
A university or college or other institution approved u/s 35(1)(ii),(iii) shall maintain books of account and get the same audited by an Accountant defined in explanation to Section 288(2) and furnish the Report to CIT/DIT by due date of furnishing of return of income u/s 139(1)
The research association shall maintain a separate statement of donations received and amount applied for research and a copy of it to be certified by auditor and submitted with the Report as refered to above
The University/College/ other institution 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—
- - detailed note on the research work undertaken by it during the previous year
  - -summary of research articles published in national or international journals during the year
  - any patent or other similar rights applied for or registered during the year;
  - programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme
If CIT/DIT is satisfied that the research association-
- - Is not maintaining books of account
  - Failed to furnish audit report
  - Not furnished the statement of the sums received and the sums applied for in research
  - has ceased to carry on its research activities, or its activities are not genuine
  - is not fulfilling the conditions subject to which approval was granted to it,

furnish a Report to the Central government after enquiries within 6 months of date of furnishing of return of income u/s 139(1)

Rule 5F:Prescribed authority/guidelines/form/manner and conditions for approval u/s 35(1)(iia)

For Section 35(1)(iia),the pre scribed authority shall be the Chief Commissioner of Income-tax having jurisdiction over the applicant
Guidelines, form and manner in respect of approval under clause (iia) of sub-section (1) of section 35 shall be as under :
- - An application for approval u/s 35(1)(iia) by a Company to be made in Form 3CF to CIT having jurisdiction
  - Form 3CF to be furnished electronically :
    - - Under DSC, if return of income is furnished under DSC
      - in any other case, through electronic verification code

Form to be verified by the applicant who is required to verify return u/s 140
the applicant shall send a copy of the application to prescribed authority alongwith acknowledgement receipt
any order approving or rejecting the application hall be passed within a period of twelve months from the end of the month in which the application was received in the Office of the Chief Commissioner of Income-tax.
For any defect noticed, a deficiency letter will be sent to the applicant before the expiry of one month from the date of receipt of the application form in his office.
The applicant shall remove the deficiency within a period of fifteen days from the date of service of the deficiency letter or such extended time however, that the total period for removal of deficiency does not exceed thirty days,
if the applicant fails to remove the deficiency within the period of thirty days so allowed, the Commissioner of Income-tax shall send his recommendation to the Chief Commissioner of Income-tax for treating the application as invalid.
If the application is complete, the Commissioner of Income-tax will send recommendation to the Chief Commissioner of Income-tax for grant of approval or rejection of the application before the expiry of the period of three months to be reckoned from the end of the month in which the application form was received in his office.
The Chief Commissioner of Income-tax may, under sub-section (1) of section 35, issue the notification to be published in the Official Gazette granting approval to the company or for reasons to be recorded in writing reject the application.
The Chief Commissioner of Income-tax may withdraw the approval granted under clause (iia) of sub-section (1) of section 35 if he is satisfied that the company has ceased to carry on its activities or its activities are not genuine or are not being carried on in accordance with all or any of the conditions under this rule.

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