Issue/approval of notifications under section 10(23C)(iv) or section 35(1)(ii)/(iii) after completion of assessment, rectification of mistake consequent thereto
1. Section 10(23C)(iv ) of the Income-tax Act, 1961, provides that any income received by a person on behalf of any fund or institution established for charitable purposes is not includible in the total income if the said fund or institution is notified by the Central Government in the Official Gazette, having regard to the objects of the fund or institution and its importance throughout India or throughout any State or States.
2. Section 35(1)(ii ) provides for deduction out of profits computed under the head “Profits and gains of business or profession”, in respect of any sum paid to the scientific research association which has as its object the undertaking of scientific research or to a university, college or other institutions to be used for scientific research. Similarly, clause (iii) of sub-section (1) of section 35 provides for deduction in respect of any sum paid to a university, college or other institution to be used for research in social science or statistical research. The deductions under section 35(1)(ii) or sub-section 35(1)(iii) are admissible only if such association, university, college or institution is for the time being approved for the purposes of these clauses, by the prescribed authority, by notification in the Official Gazette.
3. The Board have received representations that quite often the notifications are issued much after the completion of assessments of the relevant persons for the relevant assessment years. The Assessing Officers have rejected applications under section 154 on the ground that the notification was issued subsequent to the passing of the assessment order and thus there was no mistake apparent from the record.
4. The matter has been examined. The Board are of the view that in view of the notification issued at a subsequent date but which is applicable to the assessment year/s involved in the application, there is a mistake apparent from the record which can be rectified under section 154 of the Income-tax Act. However, while disposing of the rectification applications, the Assessing Officer must ensure that the conditions subject to which the approval was granted are satisfied.
Circular : No. 725, dated 16-10-1995.