Para 4 - POLICY FOR APPROVAL IN FORM 3CM u/s 35(2AB) of IT Act, 1961 - Guidelines For Approval Of In-house R & D Centres 2016 (Updated 2017)

POLICY FOR APPROVAL IN FORM 3CM u/s 35(2AB) of IT Act, 1961 i. Approval to the in-house R D centers having valid recognition by DSIR are considered from 1st April of the year in which application is made in Form 3CK. ii. Approval is considered co-terminus with DSIR recognition. iii. For companies not having DSIR recognized in-house R D centre, approval is considered from the date of recognition. iv. In case of firms having signed agreement of cooperation u/s 35 (2AB) with the Prescribed Authority for one or more R D centers approved with DSIR which implies that they have been maintaining separate accounts for R D: - the R D centre newly setup by such firms may be approved from the year in which the recognition is granted provided the company submits Form 3CK before end of the financial year, to enable these companies to claim weighted tax deduction on eligible R D expenditure of capital and revenue nature on the new centers. v. In case of firms, not having DSIR recognized R D centre, but which have applied for approval u/s 35 (2AB) of an in-house R D center on which they had made capital investments on R D of more than Rs. one crore, excluding expenditure on land and building, in the financial year preceding the year in which the firm applied to the prescribed authority for the approval capital expenditure on the R D facility for which approval has been requested (excluding capital expenditure on land and building) incurred from the commencement of said preceding year, provided the company claims such capital expenditure in their I.T. return for concerned assessment year and the firm/R D centre fulfils other conditions of approval, and provided the centre was subsequently recognized by DSIR. vi. In case of firms, having R D centres already recognized by DSIR and who have applied for approval of an in-house R D centre u/s 35 (2AB) and who have made capital investment on R D of more than Rs. one crore, excluding capital expenditure on land and buildings, on such centre in the financial year preceding the year in which the firm applied to prescribed authority for the approval such capital expenditure incurred in the said preceding year provided the company claims such capital expenditure in their I.T. returns for concerned assessment year and fulfils other conditions of approval eligibility for weighted deductions. vii . For claiming benefit on capital expenditure as mentioned in para v and vi above, Companies should: Submit the request for claim of such expenditure in the covering letter at the time of application in Form 3CK for approval u/s 35(2AB) of IT Act, 1961. Provide complete break up details of capital equipment investment on R D of more than Rs one Crore excluding expenditure on land and building, in the financial year preceding the year in which the firm applied to the prescribed authority for the approval.