R&D / agricultural extension / skill development (range 29–40)

Prescribed authority.

• For section 45(1), clause (b) read with clause (a)(ii): the Principal Chief Commissioner of Income-tax (Exemptions), in concurrence with the Secretary, Department of Scientific and Industrial Research (sub-rule 1).
• For section 45(2): the Secretary, Department of Scientific and Industrial Research (sub-rule 2(a)).

Process under section 45(2) (sub-rule 2).

• A company is not entitled to the deduction unless it enters into an agreement with the prescribed authority for co-operation in a research and development facility, and meets the conditions on books, audit and reports (clause b).
• The company applies in Form No. 11 (clause c).
• If satisfied, the authority passes a written order in Form No. 14 approving the facility within four months from the end of the month in which the application is received; before rejecting, the company gets a reasonable opportunity of being heard; a copy of the order goes to the Chief Commissioner having jurisdiction over the company (clause d).

Conditions on approval (clause e).

• The facility must not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or similar activities.
• The authority furnishes its report electronically in Form No. 12 — Part A on approval of the facility, Part B quantifying expenditure eligible under section 45(2) — to the jurisdictional Chief Commissioner within one hundred and twenty days of the grant of approval (Part A) or of the submission of the audit report (Part B).
• The company keeps separate, annually audited books for each approved facility.
• An audit report in Form No. 13 goes electronically to the Secretary, Department of Scientific and Industrial Research, by the section 263(1)(c) return due date, for each succeeding tax year.
• A copy of the audited annual account is attached to the return under section 263(1)(a).
• Capital and revenue expenditure on the facility is reflected in the schedules or notes to the audited financial statements used for the annual report and for computing income-tax.
• Assets acquired by the approved facility are used only for the approved purpose and are not disposed of without the Secretary's approval.

Definition (sub-rule 3). "Audited" means audit by an accountant as defined in section 515(3)(b).