November 27, 2007

NOTIFICATION NO. 281/2007 

In exercise of the powers conferred by section 295 read with clause (iv) of sub-section (3) and clause (a) of sub-section (6) of section 80-ID of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (Fifteenth Amendment) Rules, 2007.

(2) They shall come into force with effect from the 1^st day of April, 2008.

2. In the Income-tax Rules, 1962, after rule 18DD, the following rule shall be inserted, namely:-

"Prescribed area, minimum seating capacity, facilities and amenities for convention centres; minimum number of convention halls in the convention centres; and particulars of audit report, for deduction under section 80-ID.

18DE. (1) For the purposes of clause (a) of sub-section (6) of section 80-ID, the convention centre shall have the following area, facilities and amenities,-

(a) A convention centre located in the specified area mentioned in column (1) of the Table below, shall have a minimum covered plinth area mentioned in column (2), minimum seating capacity mentioned in column (3) and minimum number of convention halls, for the purpose of holding conferences and seminars, mentioned in column (4) of the said table.

(b) The convention centre shall have convention halls, whether called conference halls or seminar halls or auditorium or by any other name, for holding seminars and conferences.

(c) Each convention hall of the convention centre shall be equipped with modern public address system, slide and power point projection system and LCD projector or Video screening facility.

(d) The convention centre shall have a documentation centre with computers and printers, telephone with STD/ISD facilities, E-mail, photocopy and scanning facility along with trained operators to provide these facilities.

(e) The convention centre shall be completely centrally air-conditioned.

(f) The convention centre shall have adequate parking facility and other public conveniences as per the local building regulations and should also fulfil all local building regulations in respect of fire and safety.

(2)     In addition to the facilities mentioned in sub-rule (1), the convention centres may have,-

(a)     an amphitheatre and landscaped open spaces for outdoor conference or seminar related activities;

(b)     a kitchen, dining facility, cafeteria or restaurant only to support events in the convention centre.

(3)     For the purposes of clause (iv) of sub-section (3) of section 80-ID, the report of an audit shall be in Form No. 10CCBBA."

3. In Appendix-II, after Form 10CCBB, the following Form shall be inserted, namely: -

"FORM NO. 10CCBBA

[See rule 18DE]

Declaration

I/We have examined the balance sheet of the above convention centre/hotel styled ________________________________ and belonging to the assessee M/s._______________________________________________________ (Permanent Account No: ______________) as at __________ and the profit and loss account of the said convention centre/hotel for the year ended on that date which are in agreement with the books of account maintained at the head office at ________________ and branches at _______________________.

I/We have obtained all the information and explanations which to the best of my/our knowledge and belief were necessary for the purposes of the audit. In my/our opinion, proper books of account have been kept by the head office and the branches of the convention centre/hotel aforesaid visited by me/us so far, as appears from my/our examination of books, and proper returns adequate for the purposes of audit have been received from branches not visited by me/us, subject to the comments given below:

_________________________________________________________________________

In my/our opinion, the convention centre/hotel satisfies the conditions stipulated in section 80-ID and the amount of deduction claimed under this section is as per the provisions of the Income-tax Act, and

In my/our opinion and to the best of my/our information and according to explanations given to me/us, the said accounts give a true and fair view,-

(i) in the case of the balance sheet, of the state of affairs of the above named convention centre/hotel as at_________________ , and

(ii) in the case of the profit and loss account, of the profit or loss of the convention centre/hotel for the accounting year ending on __________________.

Place________

Date_________

Signed

Accountant"

[F.No.142/22/2007-TPL]

EXPLANATORY MEMORANDUM

The Finance Act, 2007 inserted a new section 80-ID in the Income-tax Act, 1961 to provide for a 100% deduction of the profits and gains derived by an undertaking from the business of operating a hotel or from the business of building, owning and operating a convention centre subject to the conditions prescribed therein.

Clause (iv) of sub-section (3) of section 80-ID of the said Act lays down that the assessee shall furnish a report of audit in the prescribed form, and duly signed by an accountant, certifying that the deduction has been correctly claimed. Clause (a) of sub-section (6) of section 80-ID of the said Act defines a 'convention centre' as a building of prescribed area and having such other facilities as may be prescribed. Accordingly, a new rule 18DE and a new form 10CCBBA have been inserted in the Income-tax Rules for this purpose.

The new rule 18DE and the new form 10CCBBA will take effect from the 1st day of April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years.

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