Para 1 - PREAMBLE - Guidelines For Approval Of In-house R & D Centres 2016 (Updated 2017)

GUIDELINES FOR APPROVAL IN FORM 3CM OF COMPANIES HAVING IN-HOUSE R D CENTRES RECOGNISED BY DSIR AND SUBMISSION OF REPORT IN FORM 3CL UNDER SECTION 35(2AB) OF IT ACT 1961 PREAMBLE 1. In order to encourage R D initiatives by industry, and to make R D an attractive proposition, the Finance Bill 1997 introduced a sub-section (2AB) in Section 35 of the IT Act 1961. Amended text of this sub-section can be seen at Annexure-I of these guidelines. This sub-section provides for weighted tax deduction of a sum equal to two times of any expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building) in certain areas specified by section 35(2AB) of IT Act, by companies on in-house R D centres, approved by the 'Prescribed Authority'. 2. Secretary, DSIR has been designated as the 'Prescribed Authority' for purposes of Section 35(2AB) of I.T. Act, as per rule 6(1B), inserted vide Government of India, Department of Revenue Notification S.O 259(E) dated 27th March 1998 (fifth amendment rules), effective from 1st day of April 1998. The text of this notification can be seen at Annexure-II.