Expenditure on Agricultural Extension Project - (New) Section 47(1)(a) / (Old) Section 35CCC

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....diture: • It must be spent on an agricultural extension project (i.e., activities aimed at improving agricultural practices, productivity, farmer education, etc.). • Exclusion: • Any cost related to land or building is not eligible. • Who can claim: • Any assessee (individual, company, etc.). • Timing of deduction: • The deduction is allowed in the same tax year in which the expenditure is incurred (no deferral). • Mandatory condition: • The project must be notified/approved by the Board (i.e. CBDT), and it must follow prescribed guidelines and condition specified. Restriction on Double Deduction • If the assessee claims and is allowed a deduction under this section: • The same expenditure cannot be claimed again under any other section of the tax law. • This restriction applies not just in the same year, but also in future years. Procedure for approval of agricultural extension project under section 47(1)(a) [ Rule 37 ] File Application • an assessee shall make an application in Form No. 20 to the Mem....

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....er of income tax on the project, • within two months from the end of the quarter in which it receives application for renewal, • the Board may notify the said project for a further period not exceeding three tax years. Revocation of Approval CBDT can cancel approval if: • (a) Activities stopped or not genuine • (b) Non-compliance with Rule 37 or Rule 38 • (c) Violation of approval conditions Communication of Order A Copy of approval/rejection or cancellation must be shared with: • (a) the applicant; • (b) the Ministry of Agriculture and Farmers Welfare, Government of India; • (c) the Commissioner of Income-tax having jurisdiction over the applicant; • (d) the Department of Agriculture of the concerned State; and • (e) the Agricultural Technology Management Agency of the concerned district. Conditions for notification of agricultural extension projects under section 47(1)(a) [ Rule 38 ] Separate books and mandatory audit • The assessee shall maintain separate books of account of the project notified under section 47(1)(....

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....equences of Non compliance • If it is found by the Commissioner of Income-tax that— • the assessee has not maintained separate books of account for the project or • the assessee has not got such books of account audited by an accountant in accordance with sub-rule (1); or • the assessee has not furnished the documents referred to in sub-rule (6); or •  the assessee has ceased to carry out activities of the project; or • the activities of the project of the assessee are not genuine; or • the activities of the project are not being carried out in accordance with the relevant provisions of the Act, rules, or • the conditions subject to which the notification was issued under rule 37, • The commissioner making appropriate inquiries, • furnish a report on the circumstances referred above to the Board for appropriate action as per the provisions of rule 37(11). Under Section 35CCC of the Income Tax Act, 1961 [ Upto 31.03.2026 ] Assessees incurring expenditure on notified agricultural extension projects are eligible for deductions under Section 3....

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....mount received from beneficiaries. • If expenses are reimbursed or reimbursable (directly or indirectly), they are not eligible for deduction under section 35CCC.. Sub-rule (6): Mandatory Furnishing reporting Before filing the income tax return Section 139(1), submit to to the Commissioner of Income-tax or the Director of Income-tax • (a) the audited statement of accounts of the agricultural extension projects for the previous year along with the audit report and amount of deduction claimed under section 35CCC(1) • (b) a note on • the agricultural extension project undertaken by it during the previous year and • the programme of agricultural extension project to be undertaken during the current year and • the financial allocation for such programme; • (c) Certificate from Ministry of Agriculture and Farmers Welfare confirming genuineness of the agricultural extension project undertaken by the assessee during the previous year. Sub-rule (7): Non-compliance consequences If the Commissioner of Income-tax or the Director of Income-tax find issues such as: • (a) not m....

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....strict. • If application is complete, CBDT must: • Issue notification in Form 3CP to be published in Official Gazette • Within 1 month from end of month of receipt • Valid for up to 3 assessment years • Subject to Rule 6AAE conditions or others imposed • Communication of Approval Order copy sent to • the applicant, • the Ministry of Agriculture, Government of India, • the Commissioner of Income-tax or • the Director of Income-tax, • the Department of Agriculture of the concerned State and • the Agricultural Technology Management Agency of the concerned District. Renewal • Assessee can apply for extension at least 2 months before expiry of existing approval. • CBDT will seek a report from jurisdictional tax authority (Commissioner of Income-tax or the Director of Income-tax) on • regarding the activities of the agricultural extension project during the period of notification • fulfillment of conditions mentioned in rule 6AAE • any other conditions subject to wh....