THE GAZETTE OF INDIA : EXTRAORDINARY

[PART II—SKC. 3(ii)J

MINISTRY OF FINANCE

(Department of Revenue)

(CentraJ Board of Direct Taxes)

NOTIFICATION

New Delhi, the 31st January, 2001

Income-Tax

S.O. 85(E).—In exercise of the powers conferred

by section 295, read with sub-section (8 A) of section 80-

IB, of the Income-tax Act, 1961 (43 of 1961), the Central

Board of Direct Taxes hereby makes the following rules

further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax

(1st Amendment) Rules, 2001.

(2) They shall come into force on the date of

their publication in the Official Gazette.

1. In the Income-tax Rules, 1962, in Part IV, after

rule 18C, the following rule shall be inserted, namely —

"18D. Prescribed authority for approval of companies

carrying on scientific research and development — (1)

For the purposes of sub-section (8A) of section 80-1B, the

prescribed authority shall be the Secretary, Department

of Scientific and Industrial Research, Ministry of Science

and Technology, Government of India.

(2) The prescribed authority shall initially grant

approval t6 a company carrying on scientific research and

development for a period of three assessment years and

subject to satisfaclory performance of that company on

periodic review extei.ci i->. said approval for a furiher

period of three assessment years so that the total period of

approval is for ten consecutive assessment years,

beginning from the initial assessment year.

18DA. Prescribed conditions for deduction under

sub-section (8A) of section 80-IB—(1) Any company

carrying on scientific research and development shall be

eligible for deduction specified in sub-section (8A) of

section 80-IB, if such company —

(a) is registered in India;

(b) has its main object the scientific and industrial

research and development;

facilities, qualified manpower, scale-up

facilities and prototype development facilities

for undertaking scientific research and

development of its own;

(d) has a well formulated research and development

programme comprising of time bound research

and development projects with proper'

mechanism for selection and review of the

projects or programme;

(e) is engaged exclusively in scienitific research

and development activities leading to

technology development, improvement of

technology and transfer of technology

developed by themselves;

(0 submits the annual return along with statement

of accounts and annual report within eight

months after the close of each accounting year

to the prescribed authority.

(2) Every company which is approved under sub-

rule (2) of rule 18D shall—

(a) sell any prototype or output, if any, from its

laboratories or pilot plants with the prior

permission of the prescribed authority;

(b) intimate the change, if any, in its memorandum

of association and articles of association

relating to its main objects and forward the

altered copy of memorandum of association and

articles of association to the prescribed

authority;

months before expiry of the approval already

granted by the prescribed authority;

•

ana envelopment projects.

>'3) If, at any stage, it is found that —

(a) the approval granted to the company referred

to in sub-rule (2) of rule 18D is to avoid

payment of taxes by its group companies or

companies related to its directors or majority

of Jts shareholders;

(D ai'j provisions ofthe Act or the rules have been

violated, the prescribed authority specified may

withdraw-the approval so granted.

(4) Every company referred to in sub-rule (1) shall

make an application to the prescribed authority for the

purposes of obtaining approval

(5) Every application referred to in sub-rule (4) shall

be accompanied by —

(a) memorandum of association and articles of

association incorporating all amendments duly

certified by the company secretary or managing

director ofthe company;

(b) annual report of the company for the last three

years, if available;

of the memorandum

understanding relating to all ongoing and future

sponsored research projects or programmes.

(6) The prescribed authority may call for any

information or document which may be necessary for

consideration ofthe grant of approval under sub-rule (2)

of rule 18D.

(7) The prescribed authority shall grant approval

within four months from the date of receipt of the

application.

Provided that where the approval is not granted,

the decision ofthe said authority shall be communicated

to the applicant within the said period of four months:

Provided further that no approval shall be refused

unless the applicant has been given an opportunity of being

heard "

[F. No. 142/47/2000-TPL]

T. K. SHAH, Director

Note.— The principal rules were published vide

notification number S.O. 969, dated 26th March,

1962 and subsequently amended from time to

time, the last amendment being 24th dated

27-12-2000.

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