Provisions of the Income Tax Act, 1961 relating to the National Committee

for Promotion of Social & Economic Welfare

[Expenditure on eligible projects or schemes.

35AC. (1) Where an assessee incurs any expenditure by way of payment of any sum to a
public sector company or a local authority or to an association or institution approved by the
National Committee for carrying out any eligible project or scheme, the assessee shall,
subject to the provisions of this section, be allowed a deduction of the amount of such
expenditure incurred during the previous year :
Provided that a company may, for claiming the deduction under this sub-section, incur
expenditure either by way of payment of any sum as aforesaid or directly on the eligible
project or scheme.
(2) The deduction under sub-section (1) shall not be allowed unless the assessee furnishes
along with his return of income a certificate—
(a)where the payment is to a public sector company or a local authority or an association
or institution referred to in sub-section (1), from such public sector company or
local authority or, as the case may be, association or institution;
(b)in any other case, from an accountant, as defined in the Explanation below sub-
section (2) of section 288,
in such form, manner and containing such particulars (including particulars relating to the
progress in the work relating to the eligible project or scheme during the previous year) as
may be prescribed.
(3) Where a deduction under this section is claimed and allowed for any assessment year in
respect of any expenditure referred to in sub-section (1), deduction shall not be allowed in
respect of such expenditure under any other provision of this Act for the same or any other
assessment year.
[(4) Where an association or institution is approved by the National Committee under sub-
section (1), and subsequently —
(i) that Committee is satisfied that the project or the scheme is not being carried on in
accordance with all or any of the conditions subject to which approval was
granted; or
(ii) such association or institution, to which approval has been granted, has not
furnished to the National Committee, after the end of each financial year, a report
in such form and setting forth such particulars and within such time as may be
prescribed,
the National Committee may, at any time, after giving a reasonable opportunity of showing
cause against the proposed withdrawal to the concerned association or institution, withdraw
the approval:
Provided that a copy of the order withdrawing the approval shall be forwarded by the
National Committee to the Assessing Officer having jurisdiction over the concerned
association or institution.
(5) Where any project or scheme has been notified as an eligible project or scheme under
clause (b) of the Explanation, and subsequently—
(i) the National Committee is satisfied that the project or the scheme is not being carried
on in accordance with all or any of the conditions subject to which such project or
scheme was notified; or
 (ii) a report in respect of such eligible project or scheme has not been furnished after the
end of each financial year, in such form and setting forth such particulars and within
such time as may be prescribed,
such notification may be withdrawn in the same manner in which it was issued:
Provided that a reasonable opportunity of showing cause against the proposed withdrawal
shall be given by the National Committee to the concerned association, institution, public
sector company or local authority, as the case may be:
Provided further that a copy of the notification by which the notification of the eligible
project or scheme is withdrawn shall be forwarded to the Assessing Officer having
jurisdiction over the concerned association, institution, public sector company or local
authority, as the case may be, carrying on such eligible project or scheme.]
[(6) Notwithstanding anything contained in any other provision of this Act, where—
(i) the approval of the National Committee, granted to an association or institution, is
withdrawn under sub-section (4) or the notification in respect of eligible project or
scheme is withdrawn in the case of a public sector company or local authority or an
association or institution under sub-section (5); or
(ii) a company has claimed deduction under the proviso to sub-section (1) in respect of
any expenditure incurred directly on the eligible project or scheme and the approval
for such project or scheme is withdrawn by the National Committee under sub-
section (5),
the total amount of the payment received by the public sector company or the local authority
or the association or the institution, as the case may be, in respect of which such company or
authority or association or institution has furnished a certificate referred to in clause (a) of
sub-section (2) or the deduction claimed by a company under the proviso to sub-section (1)
shall be deemed to be the income of such company or authority or association or institution,
as the case may be, for the previous year in which such approval or notification is withdrawn
and tax shall be charged on such income at the maximum marginal rate in force for that year.]
Explanation.—For the purposes of this section,—
(a) “National Committee” means the Committee constituted by the Central
Government, from amongst persons of eminence in public life, in accordance with
the rules made under this Act;
(b) “eligible project or scheme” means such project or scheme for promoting the social
and economic welfare of, or the uplift of, the public as the Central Government
may, by notification in the Official Gazette, specify in this behalf on the
recommendations of the National Committee.]

Provisions of the Income Tax Rules, 1962 relating to the National

Committee for Promotion of Social & Economic Welfare

[F.—National Committee for Promotion of Social

and Economic Welfare
General.
11F. In this sub-part “National Committee” means the National Committee defined in
section 35AC.
Composition of the National Committee.
11G. (1) The National Committee shall consist of fourteen members appointed by the
Central Government from amongst persons of eminence in public life.
(2) The term of office of a member shall be for three years commencing on the date of
notification.
[(3) One of the members of the National Committee shall be appointed as Chairman by the
Central Government. In the event of vacancy of the office of Chairman for any reason and
until a new Chairman is appointed, no meeting of the National Committee shall be held :
Provided that if for any meeting, the Chairman is absent, the members present for the
meeting may elect one amongst themselves to preside over the day’s sitting.]
(4) The National Committee may appoint one or more sub-committees from among its
members for looking into specific areas of activity from time to time. The National
Committee may invite any expert to examine any matter of technical nature.

Headquarters and Secretariat.

11H. (1) The headquarters of the National Committee shall be at New Delhi. Its sittings
shall take place at New Delhi or such other place as the Central Government may decide.
(2) Secretariat to the Committee will be provided by the Department of Revenue, Ministry of
Finance, Government of India and a Joint Secretary to the Government of India, in the
Department of Revenue shall act as Secretary to the Committee.

Functions.
11-I. The functions of the National Committee shall be —
(i) to approve associations and institutions for the purpose of carrying out any eligible
project or scheme; and
(ii) to recommend to the Central Government projects and schemes of any company
including a public sector company, a local authority or an approved association or
institution, for being notified as eligible projects or schemes for the purposes of
section 35AC.

Guidelines for approval of associations and institutions.

11J. In according approval to any association or institution, the National Committee shall
satisfy itself that,—
(i) the association or institution is—
(a) constituted as a public charitable trust; or
(b) registered under the Societies Registration Act, 1860 (21 of 1860) or under any
law corresponding to that Act in force in any part of India; or
(c) registered under section 25 of the Companies Act, 1956 (1 of 1956);
(ii) persons managing the affairs of the association or institution are persons of proven
integrity;
(iii) the activities of the association or institution are open to citizens of India without
 any distinction of religion, race, caste, sex, place of birth or any of them and are not
expressed to be for the benefit of any individual or community;
(iv) the association or institution maintains regular accounts of its receipts and
expenditure; and
(v) the instrument under which the association or institution is constituted does not or
the rules or regulations governing the association or institution do not contain any
provision for the transfer or application, at any time, of the whole or any part of the
income or assets of the association or institution for any purpose other than a
charitable purpose.

Guidelines for recommending projects or schemes.

11K. In making recommendations to the Central Government with rega rd to any project or
scheme for being notified in the Official Gazette as an eligible project or scheme, the
National Committee shall satisfy itself that,—
(i) the project or scheme relates to the provisions of one or more of the following :—
(a) construction and maintenance of drinking water projects in rural areas and in
urban slums including installation of pump-sets, digging of wells, tube-wells
and laying of pipes for supply of drinking water;
(b) construction of dwelling units for the economically weaker sections;
(c) construction of school buildings primarily for children belonging to the
economically weaker sections of the society;
(d) establishment and running of non-conventional and renewable source of energy
systems;
(e) construction and maintenance of bridges, public highways and other roads;
(f) any other programme for uplift of the rural poor or the urban slum dwellers, as
the National Committee may consider fit for support;
[(g) promotion of sports;]
[(h) pollution control;]
[(i) establishment and running of educational institutions in rural areas, exclusively
for women and children upto 12 years of age;
(j) establishment and running of hospitals and medical facilities in rural areas,
exclusively for women and children upto 12 years of age;
(k ) establishment and running of creches and schools for the children of workers
employed in factories or at building sites;
(l) encouraging the production of bacteria induced fertilisers;
(m) any programme that promotes road safety, prevention of accidents and traffic
awareness;]
[(n) construction of hostel accommodation for women or handicapped individuals or
individuals who are of the age of sixty-five years or more;]
[(o) establishment and running of institutions for vocational education and training in
rural areas or towns which consist of population of less than five lakhs;]
[(p) establishment and running of institutions imparting education in the field of
engineering and medicine in rural areas or towns which consist of population of
less than 5 lakhs;]
[(q) plantation of softwood on degraded non-forest land;
 (r) any programme of conservation of natural resources or of afforestation;]
[(s)relief and rehabilitation of handicapped individuals;]
(ii) the benefit of the project or scheme shall flow to the public in general or to
individuals belonging to the economically weaker sections of the society;
(iii) the applicant has the necessary expertise, personnel and other facilities for efficient
implementation of the project or scheme;
(iv) the applicant shall maintain separate accounts in respect of the eligible project or
scheme.

Application for approval of an association or institution or for recommendation of a

project or scheme by the National Committee.
11L. (1) An application for approval of an association or institution or for recommendation
of a project or scheme by the National Committee for the purposes of section 35AC may be
made to the Secretary to the National Committee for Promotion of Social and Economic
Welfare, Department of Revenue, Government of India, North Block, New Delhi - 110 001.
(2) The application should be submitted in 2 sets, written either in English or Hindi, and
should be accompanied with details about the name, address and status of applicant, the
district/ward/circle where assessed/registered, permanent account number, audited balance
sheet and profit and loss account or income and expenditure account for the latest year for
which these are available and two preceding years.
(3) The application for approval of an association or institution should contain the following
particulars and be accompanied with relevant documents :—
(i) Name and address of the association or institution;
(ii) How constituted (whether as a trust, society, etc.) supported by relevant documents
like trust deed, rules and regulations, memorandum of association, etc., and
registration certificate, if any ;
(iii) Names and addresses of the persons managing the affairs of the association or
institution, including those who had, at any time, during the three years preceding
the date of application, managed the affairs of the association or institution;
(iv) If the association or the institution is notified by the Central Government for the
purposes of sub-clause (iv) or (v) of clause (23C) of section 10 of the Income-tax
Act, 1961 (43 of 1961), or is approved for the purposes of section 80G, the
particulars of the approval granted;
[(v) Brief particulars of the activities of the association or institution during three years
preceding the date of application :
Provided that when an association or institution has been in existence for a period
of less than 3 years, in that case, that association or institution may furnish
particulars of its activities for the period of its existenc e;]
(vi) Such other information as the association or institution may like to place before the
National Committee.
(4) The application for recommendation of a project or scheme should contain the following
particulars and be accompanied with relevant documents,—
(i) Title of project or scheme;
(ii) Date of commencement;
(iii) Duration and the likely date of completion;
(iv) Estimated cost of the project or scheme duly supported by a copy of the resolution
 of the Managing Committee of the association, institution or the local authority or,
as the case may be, the Board of Directors of the company;
(v) Categories or classes of persons who are likely to be benefited from the project or
scheme;
(vi) Affirmation that no benefit from the project or scheme, other than remuneration or
honorarium for whole time or part-time work done or for reimbursement of actual
expenses related to the project will accrue to the persons managing the affairs of the
association or institution or to individuals not belonging to the economically
weaker sections of the society;
(vii) Where the project or scheme is to be executed by a company, information about
whether the project or scheme is such which the company is required to execute
under any law for the time being in force or under agreement with employees or
otherwise;
(viii) Such other particulars as the applicant may like to place before the National
Committee.

Procedure before the National Committee.

11M. (1) All applications under rule 11L should be circulated by the Secretary to the
National Committee to all the members of the Committee and will be considered by the
National Committee at its sitting held at least seven days after the date on which the
application is circulated. In exceptional cases, the Chairman may curtail the period of notice
and may also direct consideration of the application by circulation only.
(2) The National Committee may call for such other information from the applicant as it
deems necessary for taking a decision on the application and may also direct its Secretary to
make or cause to be made enquiries on any matter relating to the application.
(3) The quorum for taking a decision on an application shall be at least five members,
including Chairman. If a meeting is adjourned without taking a decision for lack of quorum,
the [decision to adjourn the meeting] may be taken by the members present, even without the
requisite quorum. [This decision would be conveyed to the absentee members along with
notice about the date, time and place for re-holding the adjourned meeting.]
(4) Approval of an association or institution shall be for such period as the National
Committee may decide, generally not exceeding a period of three years at a time. Subsequent
approvals, if required, for a further period, can be granted only if the National Committee is
satisfied about the activities of the association or institution during the preceding period of
approval.
(5) The National Committee shall recommend ordinarily to the Central Government a project
or scheme for being notified as an eligible project or scheme for an initial period up to three
financial years. If the project or scheme is likely to extend beyond three financial years, the
National Committee shall make further recommendations for a period of three ye ars at a time
after being satisfied that the project or, as the case may be, scheme is being executed
properly. For this purpose, the National Committee may monitor the execution of project or
scheme and call for such information as it deems necessary.

Other provisions.
11N. (1) The members of the National Committee shall not be entitled to any remuneration.
[(2) The members and Chairman of the National Committee shall be entitled to—
 (i) Sitting fee of Rs. 250 per day for attending a meeting of the National Committee or
any Subordinate Committee set up by the Chairman of the National Committee.
However, sitting fee would not be payable where applications are considered by
circulation or when a member is on tour.
(ii) Reimbursement of actual expenditure incurred by way of travel by rail, road or air,
for attending any meeting of the National Committee or its Subordinate Committee.
The entitlement of air travel would be restricted to the amount charged by Indian
Airlines for its economy class for the members and to the amount charged for the
executive class of the Indian Airlines for the Chairman. Members including
Chairman may travel by any class on train. Members and Chairman would also be
entitled to the reimbursement of taxi fare for reaching the venue of the meeting
from their place of stay and for going back to the place of stay after the meeting.
(iii) Daily allowance for out -station members would be admissible in accordance with
the following Table :
TABLE
(A) (B) (C)
City or Locality Stay in hotel Does not
and/or other stay
establishment in hotel or
providing makes own
boarding arrangement
and/or lodging
at scheduled
tariff
(Rs.) (Rs.)
I. ‘A’ Class Cities/Specially Expensive Localities
(i) Cities 265 106
(1) Ahmedabad U.A.
(2) Bangalore U.A.
(3) Calcutta U.A.
(4) Delhi U.A.
(5) Greater Bombay U.A.
(6) Hyderabad U.A.
(7) Kanpur U.A.
(8) Madras U.A.
(9) Pune U.A.
(ii) Localities
(1) Darjeeling District (except Siliguri Sub-
division)
(2) Darjeeling Town
(3) NEFA areas beyond Inner Line
(4) Naga Hills Tuensang area beyond the Inner
Line
(5) The following expensive/remote localities of
Himachal Pradesh :—
1. Lahaul and Spiti District;
 2. Kinnaur District;
3. Bharmour sub-division and Pangi Sub-
division of Chamba District;
4. Pargana of Pandrahbis; Outer Seraj and
Malana Panchayat area of Kulu District;
5. Chhuhar Valley of Jogindernagar Tehsil of
Mandi District;
6. Mangal Panchayat area of Solan District;
7. Dodra-Kawar area of Rohru Tehsil;
Parganas of Chhebis, Naubis,
Barabis,PandrahbisandAtharahbis; Sarahan
and Gram Panchayats of Munish, Darkali
and Kashapet of Rampur Tehsil of Simla
District; and
8. ChhotaBhangalandBaraBhangal areas of
Palampur Sub-division of Kangra District;
(6) The following hill areas in Manipur which do
not fall on the National Highway :—
1. Ukhrul
2. Churachandpur
3. Tamenlong
4. Jiribam
5. Mao Maram
6. Tengnampal
II. ‘B-1’ Class Cities/Expensive Localities
(i) Cities 225 85
(1) Coimbatore U.A.
(2) Indore City U.A.
(3) Jaipur U.A.
(4) Lucknow U.A.
(5) Madurai U.A.
(6) Nagpur U.A.
(7) Patna U.A.
(8) Surat U.A.
(ii) Expensive Localities
(1) The following areas of Himachal Pradesh :—
1. Simla;
2. Janjehli Block of Chachiot Tehsil of Mandi
District;
3. Chopal Tehsil of Simla District;
4. Trans-Giri Tract of Sirmur District;
5. Churah Tehsil, Salooni Tehsil, Kunr
Panchayat and Belaj Pargana of Chamba
Tehsil of Chamba District;
6. Manali-Ujhiarea,ParvatiandLagg Valley
 and Banjar Block of Kulu District.
(2) The whole of Jammu and Kashmir;
(3) Andaman and Nicobar Islands;
(4) The entire territory of the Laccadive, Minicoy
and Amindivi Islands
(iii) Other cases 205 78

(iv) At the option of the Chairman or Member, in lieu of daily allowance mentioned in
item (iii) above, the out-station Chairman or Member may opt to stay and claim
reimbursement of rent in any State guest house or for single room in medium range
ITDC hotel like Lodi Hotel, Qutab Hotel, Janpath Hotel, Ashoka Yatri Niwas or
State Government run tourist hotels/hostels or residential accommodation provided
by registered societies like India International Centre or India Habitat Centre. In
this situation the daily allowance would be restricted to Rs. 72, Rs. 57 or Rs. 53 for
the ‘A’ Class, ‘B -1’ Class and othe r cities or localities respec-tively mentioned in
item (iii) above.
(v) Members and Chairman would have the same entitlement for travel, boarding and
lodging in respect of tours undertaken in pursuance of a decision taken by the
National Committee. However, sitting fee would not be admissible while on tour.
(vi) Sitting fee would not be admissible in case the National Committee takes decisions
by circulation of the application alone. Actual postal charges and other expenses
incurred by Members and Chairman for circulating the application would be
reimbursed.
(vii) Reimbursement of any other expenditure with the approval of Secretary (Revenue)
and the Financial Advisor, Department of Revenue, Ministry of Finance.]
(3) In granting approval to any project or scheme undertaken by a company, the National
Committee shall satisfy itself that, where any expenditure is to be incurred in the acquisition
or erection of a capital asset, the applicant-company has made adequate arrangements for
divesting itself of the ownership of such asset without consideration in cash or otherwise
immediately on completion of the eligible project, in the following manner :—
(i) in the case of drinking water projects, to individuals belonging to the economically
weaker sections or to the local authority or the village panchayat, as the case may
be;
(ii) in the case of dwelling units, to individuals belonging to the economically weaker
sections, or to the local authority, village panchayat or an authority constituted
under any law for the purpose of satisfying the need for housing accommodation or
for the purpose of development or improvement of cities, towns and villages, as the
National Committee may decide;
(iii) in the case of school buildings, to an educational institution existin g solely for
educational purposes and not for profit or to the State Government, local authority
or a village panchayat;
(iv) in the case of non-conventional or renewable energy systems, to the district
administration, local authority, village panchayat or to indivi-duals belonging to the
economically weaker sections, or such other statutory body as the National
Committee may decide;
(v) in the case of bridges, public highways or other roads to the Central or the State
Government, local authority or such other statutory body as the National
 Committee may decide;
(vi) in the case of equipment purchased for the purpose of eligible project or scheme, to
the State Government, local authority or such other statutory body as the National
Committee may decide ha ving regard to the capacity of the authority concerned to
gainfully utilise such equipments;
Note : Where before the completion of any eligible project/scheme, the company
undertakes other eligible project(s)/scheme(s) and transfers the equipments to such
subsequent project/scheme, the company will be required to divest itself of the
ownership of the equipment only after the completion of the last eligible
project/scheme.
(vii) in any other case, to such authority as the National Committee may decide.
(4) Immediately on completion of an eligible project/scheme, the company shall furnish
details of the execution thereof to the National Committee. The National Committee shall
satisfy itself that the project/scheme has been completed in accordance with the approval
granted and that the company has divested itself of the assets in the manner prescribed by the
National Committee. If the National Committee is not so satisfied, it may, after giving an
opportunity of being heard on the proposed action, order withdrawal of the approval which
shall then be deemed never to have been granted.]

[Certificate of payment or expenditure in respect of eligible projects or schemes

notified under section 35AC.
11-O. (1) The certificate referred to in clause (a) of sub-section (2) of section 35AC shall be
in Form No. 58A .
(2) The certificate referred to in clause (b) of sub-section (2) of section 35AC shall be in
Form No. 58B .
(3) Every public sector company or a local authority or an association or institution, as the
case may be, who issues a certificate referred to in sub-rule (1) or sub-rule (2) shall, in
respect of the 31st March in each financial year, deliver or cause to be delivered to the
Secretary, National Committee, an annual report indicating the progress of work relating to
the project/scheme during the year as well as the following information (please specify the
information in respect of each contributor separately) :—
(i) Names of the contributors and their addresses.
(ii) Permanent Account Number/G.I.R. Number of the contributors.
(iii) Amount(s) of contribution.
(iv) The project/scheme for which contribution was made.
(v) Total amount of contribution received during the previous year.
(vi) Total cost of the project approved by the National Committee (with date of
Committee’s approval).
(4) Every public sector company or a local authority or an association or institution, as the
case may be, who issues a certificate referred to in sub-rule (1) or sub-rule (2) shall send an
annual statement of donation received and the details of the project to the National
Committee and to each contributor by 30th June, following the financial year in which the
amounts are received.]