INCOME TAX

Procedure to be adopted for dealing with pending as well as fresh applications for approval under section 35(1)(ii)/(iii)

Circular: No. 778, dated 20-8-1999.

1. The Finance Act, 1999, has made amendment in section 35(1) of the Income-tax Act, 1961, by which the approval under section 35(1)(ii) and section 35(1)(iii) of the Income-tax Act shall be granted by the Central Government instead of prescribed authority [Director General of Income-tax (Exemption), in concurrence with Secretary, Department of Scientific and Industrial Research]. Subsequently consequential changes have also been made in rule 6 of the Income-tax Rules, 1962 and Form 3CF vide Gazette Notification dated 25-6-1999.

2. It has been now decided that henceforth, the following procedure shall be adopted for dealing with the pending as well as fresh applications for approval under section 35(1)(ii) and 35(1)(iii) of the Income-tax Act, 1961:

(i)  Fresh application for approval under sections 35(1)(ii) and 35(1)(iii) for assessment year 2000-2001 onwards shall be filed in Form 3CF with Central Government.

(ii)  All applications pending with DGIT(E) as on 25-6-1999, i.e., the date of Gazette Notification of amendment of rule 6 of the Income-tax Rules, 1962, for approval under sections 35(1)(ii) and 35(1)(iii) pertaining to assessment year 2000-2001 or subsequent year shall stand transferred to Central Government.

(iii)  DGIT(E) in concurrence with Secretary, Department of Scientific and Industrial Research shall continue to be the prescribed authority for approval
of cases under sections 35(1)(ii) & 35(1)(iii) pertaining to assessment year 1999-2000 or any earlier year.

(iv)  Approval already granted by the prescribed authority under pre-amended sections 35(1)(ii) and 35(1)(iii) for assessment year 2000-2001 or any subsequent year, prior to 25-6-1999, i.e., the date of Gazette of amendment of rule 6 of the Income-tax Rules, 1962, shall continue be valid and no further notification or approval from Central Government shall be required in such cases for those assessment years.

Circular: No. 778, dated 20-8-1999.