GUIDELINES FOR APPROVAL IN FORM 3CM OF IN-HOUSE R&D CENTRES RECOGNISED BY DSIR AND SUBMISSION OF REPORT IN FORM 3CL

UNDER SECTION 35(2AB) OF IT ACT 1961

May, 2010

DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH MINISTRY OF SCIENCE AND TECHNOLOGY TECHNOLOGY BHAVAN, NEW MEHRAULI ROAD NEW DELHI Updated May, 2010

CONTENTS
PARTICULARS Preamble R&D centres eligible for approval Conditions subject to which approval is given Policy for approval Procedure for making applications for approval in Form 3CM and submission of Report in Form 3CL ANNEXURE-I Text of Section 35(2AB) of IT Act, 1961 ANNEXURE-II Text of Notification S.O 259(E) dt 27.3.98 for amendments in IT Rules Form 3CK Form 3CL Form 3CM ANNEXURE-III Additional information to be submitted along with Form 3CK ANNEXURE-IV Appendix I to Annexure IV Appendix II to Annexure IV Auditor Certificate ANNEXURE V Additional information required from seed companies ANNEXURE-VI List of articles or things - Schedule 11 of IT Act PAGE NO. 3 3 3 5 6 8 9 11 15 16 17 25 27 28 29 30 31

GUIDELINES FOR APPROVAL IN FORM 3CM OF 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 one and one-half 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 inhouse 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. R&D CENTRES ELIGIBLE FOR APPROVAL 3. In-house R&D centres of companies, which satisfy the following conditions are eligible to apply for approval of the 'Prescribed Authority': i) ii) iii) iv) v) The R&D centres are holding valid recognition by DSIR; The company has well defined R&D programs; The company maintains proper documentation for the R&D programs taken up; The in-house R&D centre is located in a separate earmarked area/building and has exclusive R&D manpower of its own; The R&D centres are exclusively engaged in research and development for production of any article or thing not being an article or thing specified in the list of the eleventh schedule of the Income Tax Act placed at Annexure VI.

CONDITIONS SUBJECT TO WHICH APPROVAL IS GIVEN: 5. i) The approval is subject to the following conditions: The company should have necessary valid permits / licences, if these are required, from statutory authorities for setting up the in-house R&D centre at the location where the R&D centre exists and the same should be renewed from time to time as required by the said authorities. In case the company has applied to the Prescribed Authority for approval of more than one in-house R&D centre under section 35(2AB) of the I.T.Act, each of such centres should have a valid recognition by DSIR.

ii)

iii)

Company shall not claim deduction in respect of the expenditure written off under Section 35(2AB) under any other provision of the IT Act. The company should also submit an undertaking as per Part C of Form No. 3CK to maintain separate accounts for each R&D centre approved under Section 35(2AB) by the Prescribed Authority, and to get the accounts duly audited every year by an Auditor as defined in sub-section (2) of section 288 of the IT Act 1961. (The statutory auditors of the Company should audit the R&D accounts. To facilitate this audit separate books of accounts for R&D should be maintained. Also, the statutory auditors should sign the auditors certificate in the details required to be submitted as per annexure-IV of the guidelines to facilitate submission of Report in Form 3CL). The company should enter into an agreement with the Prescribed Authority (Secretary, DSIR) for co-operation in such research and development facility and for audit of the accounts maintained for that facility, as per format given in Part B of Form 3CK. Note: The word co-operation shall, inter-alia, mean that the first party shall be willing to undertake projects of national importance, as may be assigned to it by the Prescribed Authority, on its own, or in association with laboratories of CSIR, ICAR, ICMR, DRDO; DBT, MCIT, M/O Environment, DOD, DAE, Department of Space, Universities, Colleges or any other public funded institution(s). The First Party would be free to exploit the results of such R&D projects, subject however, to any conditions which may be imposed by Government of India, in view of national security or in public interest.

iv)

v)

vi)

The audited accounts for each year maintained separately for each approved centre shall be furnished to the Secretary, Department of Scientific & Industrial Research by 31st day of October of the succeeding year, along with information as per Annexure-IV of the Guidelines. Assets acquired and products, if any emanating out of R&D work done in approved facility, shall not be disposed off without approval of the Secretary, DSIR. Sales realisation arising out of the assets sold shall be offset against the R&D expenditure of the R&D Centre claimed under section 35(2AB) for the year in which such sales realisation accrues under section 35(2AB) of IT Act, 1961. Expenditure claimed for deduction under the subsection shall be reduced to that extent. The R&D facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature. Expenditures, which are directly identifiable with approved R&D facility only, shall be eligible for the weighted tax deduction. However, expenditure in R&D on utilities which are supplied from a common source which also services areas of the plant other than R&D may be admissible, provided they are metered/measured and subject to certification by a Chartered Accountant.
4

vii)

viii)

ix)

x)

Expenditure on manpower from departments, other than R&D centre, such as manufacturing, quality control, tool room etc. incurred on such functions as attending meetings providing advice / directions, ascertaining customer choice/response to new products under development and other liaison work shall not qualify for deduction under section 35(2AB) of I.T. Act 1961. Grants/Gifts, donations, presents and payments obtained by the company for sponsored research in the approved in-house R&D centres shall be shown as credit to the R&D accounts for the purpose of Section 35(2AB) of I.T. Act, 1961, and the R&D expenditure claimed for deduction under the sub-section shall be reduced to that extent. Expenditure of general nature, such as, expenditure on production, maintenance and quality control departments, manufacturing overheads/ depreciation/ interest/ lease rentals on manufacturing/ quality control equipment, manpower expenditure in manufacturing/ service departments, head office expenditure, expenditure on security, guest house and canteen and other overheads of common nature, shall not be admissible under Section 35(2AB) of I.T. Act. The approval by the Prescribed Authority of the R&D facility for weighted tax deduction shall be subject to the provisions of I.T. Act, as amended from time to time. Any commercial activity as well as Research and Development by the companies should be in areas permitted by laws or rules and regulations in force and should be undertaken with due approvals from regulatory authorities wherever such approvals are necessary. The remunerations paid to the members of the board of Directors, should not be included in the R&D expenditure for the purpose of Section 35 (2AB). The expenditure eligible should necessarily be reported in the audited financial statement prepared for the purpose of published annual report as well as for the purpose of Income Tax returns.

xi)

xii)

xiii)

xiv)

xv)

xvi)

6. POLICY FOR APPROVAL 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. Approval is considered co-terminus with DSIR recognition. For companies not having DSIR recognized in-house R&D centre, approval is considered from the date of recognition. 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 investments on these centers of capital and revenue nature commenced or after the agreement of cooperation was signed,
5

ii. iii. iv.

(which ever was later) 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 had claimed 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. 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 had claimed such capital expenditure in their I.T. returns for concerned assessment year.

vi.

PROCEDURE FOR MAKING APPLICATION FOR APPROVAL IN FORM 3CM AND SUBMISSION OF REPORT IN FORM 3CL 7. All applications need to be sent to the following address (each set of application should be tagged on the left corner and should not be spiral bound): Secretary, DSIR C/o Head, RDI Department of Scientific & Industrial Research Ministry of Science & Technology, Technology Bhavan, New Mehrauli Road, New Delhi-110016 Documents required to be submitted for initial approval in Form 3CM (3 sets):i. ii. iii. iv. v. vi. Application in Income Tax prescribed Form 3CK giving address of each in-house R&D centre recognised by DSIR duly signed by Managing Director and witness. Copy of DSIR recognition letter for each of in-house R&D centre. Clearly defined objectives of R&D not exceeding 6 lines. Latest audited financial statement along with annual report. Additional information as per annexure III of the guidelines (page 17). Additional information as per Annexure-V for seed companies.

8.

vii. One page write-up clearly summarising the R&D activities taken up
separately at each of the R&D centre/s recognised by DSIR.

viii. Confirmation that the company does not manufacture any product listed in
Schedule 11 of IT Act.

ix. Total capital cost of in-house research facility, given break up of expenditure
of complete research facility including cost of equipment, land & building as on 31st March of last completed financial year. x. An undertaking that the company shall reflect the capital and revenue expenditure on R&D in the audited financial statement of the company prepared for the purpose of published annual report as well as for the purpose of Income Tax returns. xi. A commitment that the company shall submit the desired information as per Annexure IV of DSIR Guidelines (pages 25 to 29) every year for the approved period while filing the Income Tax returns.

9.

Documents required to be submitted for extension of approval in Form 3CM (2 sets): i. Income Tax prescribed Form 3CK giving address of each in-house R&D centre recognised by DSIR duly signed by Managing Director and witness. ii. Copy of renewal of recognition letter issued by DSIR.

10.

Documents required to be submitted by 31st October of each succeeding year of approved period to facilitate submission of Report in Form 3CL (2 sets): i. Complete details as per annexure-IV of DSIR guidelines.

Annexure-I TEXT OF SECTION 35(2AB) OF I.T. ACT, 1961 (1) Where a company engaged in the business of [bio-technology or in any business of manufacture or production of any article or thing not being an article or thing specified in the list of the eleventh schedule incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to one and one half times of the expenditure so incurred. [Explanation. For the purposes of this clause, expenditure on scientific research, in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).] (2) No deduction shall be allowed in respect of the expenditure mentioned in clause (1) under any other provision of this Act. No Company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and for audit of the accounts maintained for that facility. The prescribed authority shall submit its report in relation to the approval of the said facility to the Director General in such form and within such time as may be prescribed. No deduction shall be allowed in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 2012.

(3)

(4)

(5)

Note: - The rate of weighted tax deduction has also been raised to @200%, as announced in the Union Budget 2010.

Annexure-II PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART-II, SECTION 3, SUB-SECTION (ii) DATED 27.03.1998 F.No. 142/23/97-TPL GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE CENTRAL BOARD OF DIRECT TAXES NEW DELHI, the 27th. March, 1998 S.O. 259 (E) In exercise of the powers conferred by section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes, hereby makes the following rules :1. (1) (2) 2. These rules may be called the Income-tax ( Fifth ) Amendment Rules, 1998. They shall come into force with effect from the first day of April, 1998.

In the Income-tax rules, 1962, (A) in rule 6,-

(a)

after sub-rule(1A), the following sub-rule shall be inserted, namely :(1B) For the purposes of sub-section (2AB) of section 35, the prescribed authority shall be the Secretary, Department of Scientific and Industrial Research.;

(b)

after sub-rule(3), the following sub-rule shall be inserted, namely :(4) The application required to be furnished by a company under subsection(2AB) of section 35 shall be in Form No.3CK.;

(c)

after sub-rule(5), the following sub-rule shall be inserted, namely :(5A) The prescribed authority shall, if he is satisfied that the conditions provided in this rule and in sub-section (2AB) of section 35 of the Act are fulfilled, pass an order in writing in Form No. 3 CM: Provided that a reasonable opportunity of being heard shall be granted to the company before rejecting an application.

(d)

after sub-rule(7), the following sub-rule shall be inserted namely :(7A) Approval of expenditure incurred on in-house research and development facility by a company under sub-section (2AB) of section 35 shall be subject to the following conditions, namely:(a) The facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature; (b) The prescribed. authority shall submit its report in relation to the approval of in-house Research and Development facility in Form No. 3CL to the Director General (Income Tax Exemptions) within sixty days of its granting approval; (c) The company shall maintain a separate account for each approved facility; which shall be audited annually and a copy thereof shall be furnished to the Secretary, Department of Scientific and Industrial Research by 31st day of October of each succeeding year; Explanation:- For the purposes of this sub-rule the expression "audited" means the audit of accounts by an accountant, as defined in the Explanation below sub-section (2) of section 288 of the Income-tax Act, 1961. (d) Assets acquired in respect of development of scientific research and development facility shall not be disposed off without the approval of the Secretary, Department of Scientific and Industrial Research"; (B) in Appendix II, after Form 3CJ the following Forms shall be inserted, namely:-

10

FORM NO. 3CK Application form for entering into an agreement with the Department of Scientific and Industrial Research for cooperation in in-house Research and Development facility and for audit of the accounts maintained for that facility. PART A 1 2 3 Name and Address of the registered office of the company including Telex/Fax/Phone numbers Permanent Account Number (PAN) of the company Please specify the nature and Business/activity of the companyManufacture/production of Drugs Pharmaceuticals Electronic Equipments Computers Telecommunications Equipments Chemicals Any other article or thing notified under sub-section (2AB) of section 35 (please specify)

Annual production of the eligible products of the company during the past three years. Annual expenditure on scientific research of the company during the past three years, giving break-up of expenditure on land and buildings. Please give details of nature of existing in-house Research and Development facilities including the address of the in-house Research and Development facility. Registration number, date and validity of recognition granted by Department of Scientific and Industrial Research to the in-house Research and Development centre of the company. Proposed objectives of scientific research contemplated by the company.

11

PART B AGREEMENT Whereas,....................................(hereinafter referred to as First Party) and the Department Of Scientific and Industrial Research (hereinafter referred to as Second Party), have decided to enter into an agreement, thatthe First Party shall maintain an in-house Research and Development facility to be approved by the Second Party, the above Research and Development facility shall be exclusively used by the First Party to carry out scientific research relating to manufacture or production of any drugs, pharmaceuticals, electronic equipments, computers, telecommunication equipments, chemicals or any other article or thing notified by the Central Board of Direct Taxes, under sub-section (2AB) of section 35. the First Party shall provide full co-operation to the Second Party in carrying out the Research and Development work relating to manufacture or production of any drugs, pharmaceuticals, electronic equipments, computers, telecommunication equipments, chemicals or any other article or thing notified by the Central Board of Direct Taxes under sub-section(2AB) of section 35. the First Party shall maintain separate accounts for both revenue and capital expenditure on scientific research including that on in-house Research and Development facility, which shall be annually audited by an accountant as defined in section 288(2) of the Income-tax Act, 1961, and a copy of which has to be attached with the return of income under sub-section(1) of section 139 to claim deduction under section 35(2AB), subject to the First Party meeting the conditions specified under subsection(2AB) of section 35, and on being satisfied of the feasibility of the said in-house Research and Development facility in terms of its objectives and of the genuineness of the expenditure on said Research and Development facility by First Party, the Second Party shall submit its report in relation to the approval of the said facility to the Director General of Income-tax (Exemptions) within a period of sixty days from the date on which the First Party makes application in the Form No. 3CK.

(i)

(ii)

(iii)

(iv)

(v)

Agreed on the........................day of............................month of.......................year. First Party _______________________ _______________________ Signature of the Principal Officer of the company (Name, Designation and Address) Place............... Date................
12

Witness _______ Signature (Name and address) Place................. Date.................. Second Party _________________________ Signature of/on behalf of the Secretary, Department of Scientific & Industrial Research Place................. Date.................. Witness ________ signature (Name and address) Place.................. Date...................

13

PART C Certified that the above information is true to the best of our knowledge and belief. We undertake to: (i) maintain separate accounts for both revenue and capital expenditure on scientific research including that on in-house Research and Development facility, which shall be annually audited by an accountant as defined in subsection (2) of section 288 of the Income-tax Act, 1961, and a copy of which has to be attached with the return of income under sub-section(1) of section 139 to claim deduction under sub-section(2AB) of section 35; (ii) submit annual progress reports to the Secretary, Department of Scientific and Industrial Research; render full co-operation to in carrying-out the Research and Development work relating to manufacture or production of any drugs, pharmaceuticals, electronic equipments, computers, telecommunication equipments, chemicals or any other article or thing notified by the Central Board of Direct Taxes under subsection (2AB) of section 35; and assets acquired by the approved facility will be utilized only for the approved purpose and shall not be disposed off without the approval of the Secretary, Department of Scientific and Industrial Research.

(iii)

(iv)

------------------------------------------------------------------------Signature of the Principal Officer of the company (Name, Designation and address) Place Date Notes: 1. Six sets of duly filled applications are to be submitted to the Secretary, Department of Scientific & Industrial Research. 2. Copy of the latest Annual Report along with Balance Sheet has to be enclosed. 3. Enclose a copy of DSIR recognition of the in-house (R&D) centre.

14

FORM No. 3CL Report to be submitted by the prescribed authority to the Director General (Incometax Exemptions) under section 35(2AB) of the Income-tax Act, 1961. 1. 2. 3. Name and Address of the registered office of the company including Telex/Fax/Phone numbers Permanent Account Number (PAN) of the company Name and designation of the Principal Officer of the company Nature of Business/activity of the company Manufacture/production of Drugs Pharmaceuticals Electronic Equipments Computers Telecommunications Equipments Chemicals Any other article or thing notified under sub-section (2AB) of section 35. (please specify) Annual production of the eligible products of the company during the past three years. Proposed objectives of scientific research contemplated by the company. Whether the nature of the business is related to the proposed objectives of the scientific research contemplated by the company. Details of the nature of existing in-house Research and Development facilities specifying whether the in-house Research and Development facility is adequate for carrying out scientific research. Whether recognition granted to the in-house Research and Development centre of the company by Department of Scientific and Industrial Research. Total cost of in-house research facility, giving break-up of expenditure on land and buildings (ASSESSMENT YEAR ________) Whether agreement for co-operation and Research and Development facility and for audit of the accounts maintained for that facility entered into. Certified that the above information is true to the best of our knowledge and belief. -------------------------------------Signature of Secretary, DSIR Place : .................... Date : ..................

4. 5. 6. 7.

8. 9. 10.

15

FORM NO. 3CM

Order of approval of in-house research and development facility under section 35(2AB) of the Income-tax Act. 1961 Name, Address and PAN of the company Nature of the business of the company Manufacture/production of article or thing Objectives of the scientific research to be conducted by in-house Research and Development facility Address at which such Research & Development facility is located Ref. No. and Date of the application The above Research & Development facility is approved for the purpose of section 35(2AB), subject to the conditions underlined therein. Place :.. Date : ...

1. 2.

3.

4. 5.

(Signature) (Name) Secretary, DSIR (Seal)

File No.. Order No.. Copy to: (1) Company (2) The Director General (Income-tax Exemption)

16

Annexure-III
ADDITIONAL INFORMATION TO BE SUBMITTED ALONG WITH FORM 3CK

(Updated Renewal/ Recognition Application)

PART-A: CORPORATE 1. Details of DSIR recognition: (a) Initial recognition date: (b) Recognition valid up to: (c) Recognition No. Name of the company Brief history of the company Address: (a) Head office (b) Delhi office (c) Factory/factories (d) R&D laboratory (ies) recognized (e) R&D laboratory (ies) applied for approval u/s 35(2AB) of IT Act (f) R&D laboratory (ies) other than (d) and (e) Nature of business Company Structure (a) Public/Private/Co-operative/Joint Sector/ Proprietary/Partnership concern/100%EOU (b) Whether Foreign Equity Participation (Please give name of foreign equity participant and percentage thereof) (c) Names of Directors of the Board/Proprietors (d) Name and address of NRI(s), if any

2. 3. 4.

5. 6.

7.

Capital structure (a) Authorised Capital (b) Paid-up Capital

8. 9. 10.

Category of the firm: Large / Medium / Small Scale Unit Administrative Ministry Concerned: Technical Collaboration, if any: (a) Foreign S.No. Product

Name & Address of the Technical Collaborator

History of Collaboration

(b) Indian S.No. Product

Name & Address of the Technical Collaborator

History of Collaboration

17

(c) 11.

Details of R&D collaboration entered with/applied for

Annual turnover for the last 3 years (Rupees in Lakhs): Year Indigenous Export Total

12.

Main products manufactured S.No. Product Licensed Capacity, if any Installed Capacity Yearly Production for the last 3 Years

13.

Total manpower employed by the firm including those of R&D: (a) Scientific & Technical having graduate degree in engineering/technology or Masters degree in Science and above Administrative (non-technical) Others

(b) (c)

Total (a+b+c) 14. Total R&D expenditure of the company (year-wise figures for the past three years (actuals), current year (budgeted) and total estimated for the next three years. Year Past three years (Actuals) Current year (Budgeted) Year

Next three year (Estimated)

18

PART-B : RESEARCH & DEVELOPMENT (In case application is for more than one R&D unit, Part B of the application should be submitted separately for each R&D unit)
1. 2. Location of the R&D unit Is the R&D unit has already been recognised with DSIR? If yes: a. Year of initial recognition and its validity period b. Current recognition letter No. and its validity period c. Break in recognition, if any Changes if any, since the last application for renewal of recognition Manpower Floor area R&D and pilot plant facilities Any other Present status of the R&D projects reported in earlier application of recognition Date of commencement of R&D work (in case of fresh recognition) Main objectives of the R&D program Whether R&D establishment is housed in a separate building inside/outside the factory premises? (a) Layout plan of the R&D unit (b) Approx. floor area of the R&D Unit. (c) Photographs of the major R&D facilities (d) Are separate accounts maintained for R&D expenditure? (e) Are the R&D activities separate from production and quality control? (f) Details of environmental clearances obtained, if applicable (g) Details of DCGI approval obtained in case of clinical trials, if applicable List of major R&D equipment procured: (a) Value of indigenous R&D equipment, as on date (b) Value of imported R&D equipment, as on date (c) Value of the pilot plant facilities, if applicable (d) Cumulative value of all R&D assets, as on date (e) Gross cumulative value of all quality control and testing facilities/equipment (other than R&D facilities), as on date. Do you have a full time R&D Director/Head? if so, (a) Name & Designation (b) Qualification (c) Experience Date of appointment to the post Contact Nos (Telephone, Mobile, Fax and Email) Details of R&D achievements made during the past 3 years: (a) New products developed (b) New processes developed (c) Improvement in existing production process(s) (d) Energy conservation (e) Pollution control

3.

4. 5. 6. 7. 8.

9.

10.

11.

19

(f) Import substitution (indicate items developed and foreign exchange earned). (g) Seminars/symposia attended by R&D staff (attach a separate sheet giving details) (h) Number of papers published (attach reprints if available) (i) Number of R&D personnel who attended R&D training (Give details in a separate sheet). 12. Patents filed in India or abroad during the last 3 years: S.No. 1 Products/Process 2 Names of the Country 3 Year 4 Patent No. 5

13.

(a) commercialised by the company S.No. 1 Technology 2

Whether any of the new technologies developed by the company have been

Year of commercialisation 3

(b) exported S. No. 1 Technology 2 Year 3 4

Exported to
Party Country 5

(c) sold to other parties in India/abroad S. No. 1 Technology 2 Year 3

Party
4

14. 15.

Give particulars of R&D projects in progress, as per Appendix 1 to Annexure - III R&D project proposed during the next three years, as per Appendix 2 to Annexure - III

20

17.

R&D expenditure of the unit (year-wise figures for the past three years (actual), current year (budgeted) and estimated for the next three years. Past three years Current year Next three years

Year
Capital Recurring Total

(Actual)
Capital

Year (Budgeted)
Capital Recurring Recurring

(Estimated)

Capital
Recurring

Total Capital
Recurring

Total Capital
Recurring

Total Total Capital

Recurring

Total

Total

18. Income-tax rebate availed on R&D expenditure under IT Acts / IT Rules, during the past three years: Year 35(1) (i) 35(1) (iv) 35(2AB) 80-IB(8A) 35(2AA) Rule 5(2) Any other

19.

programmes/commercialization of technologies from any central / state Govt. department(s) during the last three years

Details

of

grants-in-aid

funds

loan

equity

received

for

R&D

20.

Sales turnover attributable to commercialisation of R&D products/technologies developed during the last three years.

21.

Educational status of the manpower engaged in R&D: Qualification a) Doctorate Degree b) Masters Degree c) Graduates/ Engineering Graduates d) Diploma Holders Full-time (Number) Part-time (Number) Proposed Recruitment of R&D manpower in next three years

e) Others Total

21

22. (a) Have you obtained any assistance/purchased know-how from NRDC or any of the please give details along with year and source.

National laboratories/universities/IIT's/other institutions during the last 3 years? If so,

(b) Whether any of the items of R&D work in progress or proposed by you is being done elsewhere in country. If so, please indicate location.

23. Do you have necessity of collaborative R&D efforts for projects with CSIR or any other National Laboratories/institution?

24. Indicate briefly any incentives/benefit derived from the recognition of In-house R&D unit other than those mentioned in Column 18 &19. I hereby certify to the best of my knowledge and belief that all the particulars furnished above are correct and complete. I agree to comply with the terms and conditions of of Science and Technology, New Delhi and via lotion of the same may lead to derecognition automatically. recognition as laid down by the Department of Scientific & Industrial Research, Ministry

or Head of the organisation) Name : Designation : Tel. Nos. : Fax No. :

(To be signed by M.D./Chief Executive

Signature

Full Address :

Date:

Place:

Mobile No :

Email Address :

22

Appendix 1 to Annexure - III

DETAILS OF R&D PROGRAMMES/PROJECTS IN PROGRESS

Sl.NO

Title & Scope of the R&D project

Name of the Project Leader

Year in which stared

Duration of the project

Estimated Project Cost (Rs. in Lakh)

Remarks (indicate specific reasons, if any, for proposing the R&D project) F.E.

Capital

Recurring

Total

23

Appendix 2 to Annexure - III

DETAILS OF PROPOSED R&D WORK (FOR THE NEXT THREE YEARS)

Year

S.No.

Title & Scope of the project proposed

Name of the project leader

Duration of the Project

Total estimated project cost (Rs. in Lakh)

List of specialised equipment required to be purchased and indicate their cost F.E.

List of any special raw material required with cost

Remarks (indicate specific reasons, if any, for proposing the R&D project)

Capital

Recurring

Total

24

Annexure-IV Documents required to be submitted during October for each subsequent year of the approved period u/s 35 (2AB) of the Income Tax Act. Important instructions: a All documents submitted should be page numbered. b Adequate specifications of equipment are furnished along with capitalized cost. c Details of manpower cost needs to be submitted in three statements providing remunerations paid to each employee for the complete year i.e. alphabetic list of R&D employees for the complete year; employees joined during the year and employee left during the year. d Number of copies required to be submitted two. 1. A crisp write-up not exceeding one page on the thrust areas and significant achievements of each In-house R&D facility duly signed by the head R&D along with his contact phone number and e-mail ID to be submitted by e-mail as word document and also a hard copy to RDI section, DSIR ([email protected] and [email protected]). 2. Details of R&D progress for each approved In-house R&D facility as per Appendix I to Annexure IV of DSIR guidelines. 3. Details of Expenditure as per Appendix II to Annexure IV of DSIR guidelines duly certified by the company and the statutory auditors. 4. A table consolidating details of expenditure as per Appendix II to Annexure IV for all the approved In-house R&D facilities for companies having more than one approved facilities u/s 35 (2AB) of the Income Tax Act duly certified by statutory auditors. 5. Published annual report/ audited financial statement for the desired financial year clearly highlighting the capital and Revenue expenditures on R&D. 6. Reconciliation statement of the claims made as per Appendix II to Annexure IV (consolidated statement) with the expenditure reported in the relevant annual report/ audited financial statement signed by corporate auditors. (Note:- R&D figures reported in the Directors Report are not considered) 7. Breakup of the capital assets as reported in the annual report/ audited financial statement as per the following table: Description Manufacturing (Amount in Rs. Lakhs) Quality R&D Total Control

As on 31st March 2005 Additions during the year As on 31st March 2006 Note: The years mentioned above are only indicative.

8. Annual turnover of the company during the last three years on products launched based on technology developed in house as per the following table (in order to have an assessment on the effectiveness of R&D efforts): (Amount in Rs. Lakhs) Ratios Total R&D Turnover based on products Year Total developed in house and Annual Expenditure launched during the last three Turnover years Domestic Export Total 6/2 6/3 1 2 3 4 5 6 2005-06 Note: The year mentioned above is only indicative. 9. Hyperlink of latest annual report on website of the company.

Declaration by the Head of R&D activities: It is certified that i. ii. iii. Proper logbooks are being maintained for all R&D assets for which weighted tax deduction is claimed. Lab records are being maintained by all R&D scientists. The submissions being made for the assessment year -----corresponding to the financial year --------comprise of ------pages and contain all the eight points mentioned above.

Signature Name Designation Head of R&D activities of the company Phone No. Fax No. Mobile No. Email ID Website Name, designation, phone, fax, Mobile No. and e-mail ID of nodal officer for providing any clarifications.

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Appendix I to Annexure-IV

Additional Information to be submitted separately for each R & D Centre approved by the Prescribed Authority U/S 35(2AB) of I.T. Act at the time of reporting of the expenditure by secretary DSIR as per Form 3CL

Accounting Year:

Assessment Year:

1.

A brief note on progress of each of the projects shown in application to Prescribed Authority at the time of approval. Any changes with regard to the scope of the projects as originally envisaged and the manpower working on the project may be highlighted. Details of any additional projects taken up during the year. Details of changes if any in the R&D infrastructure/and staff along with biodata of any new R&D staff recruited and qualification-wise break-up of existing staff. Details of R&D achievements and technologies commercialised during the year. Details of patents obtained and/or filed during the year. Details of any other changes in the approved R&D centre.

2. 3.

4.

5. 6.

I certify that the above details are correct as per my knowledge and belief.

Signature of the Managing Director Date: Place:

27

Appendix-II to Annexure-IV

Details of expenditure incurred on R&D centre/facility approved by Secretary, DSIR u/s 35(2AB) 1. 3. 4. Assessment Year: Location of the R&D facility: Details of expenditure: A. (i) Land (ii) Buildings B. Capital Equipment (i) 2. Financial Year: (in Rs. Lakhs)

(attach a separate sheet giving item-wise break-up of items costing more than Rs. 1 lakh)* C. Revenue Expenditure

Salaries/wages
(including perquisites/other benefits; attach a list of persons along with designation, whose salary has been charged to R&D account along with salaries and other benefits paid.)

(ii) (iii)

Material/Consumables/spares
(Give item-wise details of items costing more than Rs. 50,000/- each in separate sheet)*

Utilities

(iv)

Any other expenditure directly related to R&D.

(Give item-wise break-up of expenditure more than Rs. 1 lakh in separate sheet)*

Steam compressed air water electricity Any others (specify)

Total revenue expenditure C(i)to(iv)eligible U/S 35(2AB) D. E. Total expenditure on the approved R&D centre (excluding land and building) (B + C) Details of amounts received by the R&D Centre in cash and kind for: i) Commercial sale of prototypes/ pilot plant production. ii) Donations/payments for sponsored research programmes iii) Income from contract research. iv) Income from sale of R&D assets. v) Credit for transfer of R&D assets for assets transferred out of the R&D centre based on book value of R&D assets. vi) Others (specify) Net amount chargeable to R&D expenditure (D E)

F.

I certify that above expenditure claimed are as per the guidelines issued by DSIR and correct to the best of my knowledge and belief. Signature of the Managing Director Date : Place:

claimed only if the utility is exclusively meant for the R&D centre or the consumption of the utility by R&D is metered and recorded. 28

*The totalled cost should tally the claim amount. The expenditure on each utility should be given separately.

The expenditure shall be

AUDITOR'S CERTIFICATE I have audited the accounts of the in-house R&D Centre of M/s _______________________________ located at _______________________ which is approved U/S 35(2AB) by the Prescribed Authority (Secretary, DSIR). I certify that: The company has maintained separate accounts for the R&D Centre approved by DSIR U/S 35(2AB) The accounts have been satisfactorily maintained. The expenditure certified are also in consonance with DSIR guidelines. The firm has extended full co-operation to me in carrying out the audit of the accounts of the R&D Centre.

a)

b)

c)

The expenditure of Rs. ------------ reported for the financial year ----------relevant to the assessment year -------------- as detailed out in Appendix II to Annexure IV of DSIR guideline at para `4 is correct to the best of my knowledge and belief as per the result of the audit of the approved R&D Centre carried out by me. Also R&D capital expenditure is reflected on page ---- and revenue expenditure on page ---- in the audited financial statement/annual report It is further certified that the expenditure claims do not include the following: i. Expenditure on outsourced R&D activities. ii. Expenditure purely related to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature. iii. Lease rent paid for research farms or research labs. iv. Expenditure on foundation seeds multiplication, demonstration crops and grow out test etc. beyond breeder seed development. v. Foreign patent filing expenditure. vi. Foreign consultancy expenditure. vii. Building maintenance, Municipal taxes and rental charges being paid. viii. Any interest component on loans for R&D. ix. Clinical trial activities carried out outside the approved facilities. x. Contract research expenses duly certified by chartered accountant. xi. Expenditure on any payments made to members of the board of Directors or any other part time employees working for R&D. Signature & Seal of the Statutory Auditor Date : Place:
29

Annexure-V

A. The following documents along with application in Form 3CK and Annexure III of DSIR guidelines also need to be submitted for comprehensive assessment of R&D efforts of seed companies. 1. Details of laboratory facilities available exclusively for R&D along with specialized lab facilities for precision in variety identification and other infrastructure available along with layout along with land available for research activities providing breakup of area/plot for nucleus seeds, sick farms, poly houses and cross breeding programs and any other such specified activities. 2. Manpower available for R&D indicating breeders for various crops, agronomists, pathologists, microbiologist, molecular biologist, virologist, information technology specialist for bioinformatics work, entomologists etc. 3. Crop wise character details of all the germplasm lines available and associated cross breeding research programs; Facilities available for storage of Germplasm; Disposal policy of the company for R&D crops. 4. Summary of independent test reports of research hybrids/varieties (developed at the recognised in-house R&D centres) carried out by authorised state/central government/ private agencies duly authenticated; Documentary evidence in support of permission to market research varieties (truthfully labelled seeds) by authorised central/state government agencies along with annual turnover of research varieties (truthfully labelled seeds) for the last three Financial Years along with breakup of turnover of own varieties and public notified varieties/hybrids. B. The R&D expenditure claims u/s 35 (2AB) of the Income Tax Act will be limited to

expenditure incurred in the approved facilities/ farms up to breeder seed development only.
C. Lease rent paid for the approved research farms shall not be eligible for weighted

tax deduction u/s 35(2AB) of IT Act.

30

Annexure - VI

THE ELEVENTH SCHEDULE LIST OF ARTICLES OR THINGS 1. Beer, wine and other alcoholic spirits. 2. Tobacco and tobacco preparations, such as, cigars and cheroots, cigarettes, biris, smoking mixtures for pipes and cigarettes, chewing tobacco and snuff. 3. Cosmetics and toilet preparations. 4. Tooth paste, dental cream, tooth powder and soap. 5. Aerated waters in the manufacture of which blended flavouring concentrates in any form are used. 13 [Explanation.Blended flavouring concentrates shall include, and shall be deemed always to have included, synthetic essences in any form.] 6. Confectionery and chocolates. 7. Gramophones, including record-players and gramophone records. 8. 14[***] 9. 15[Projectors.] 10. Photographic apparatus and goods. 11-21. 14[***] 22. Office machines and apparatus such as typewriters, calculating machines, cash registering machines, cheque writing machines, intercom machines and teleprinters. Explanation. The expression office machines and apparatus includes all machines and apparatus used in offices, shops, factories, workshops, educational institutions, railway stations, hotels and restaurants for doing office work 16[and for data processing (not being computers within the meaning of section 32AB)]. 23. Steel furniture, whether made partly or wholly of steel. 24. Safes, strong boxes, cash and deed boxes and strong room doors. 25. Latex foam sponge and polyurethane foam. 26. 17[***] 27. Crown corks, or other fittings of cork, rubber, polyethylene or any other material. 28. Pilfer-proof caps for packaging or other fittings of cork, rubber, polyethylene or any other material. 17 29. [***]]

31