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2013 (3) TMI 491 - DELHI HIGH COURTExemption u/s 10(21) - Whether the petitioner Centre for Development of Telematics – C. DoT is a ‘scientific research association’ for the purposes of clause (ii) of sub-section (1) of section 35? - assessee contested against the denial of claim stating that the Board is required to refer this question to the central government to take the decision which was not followed - central government categorized the petitioner as ‘other institution’ partly engaged in scientific research - Held that:- On going through the file submitted by respondent no clear cut reference from the Board to the central government arises requiring the central government to decide as to whether the petitioner fell within the category of a ‘scientific research association’ or in the second category of ‘other institution’ partly doing scientific research as referred to in section 35(1)(ii) of the said Act. In the note prepared at paragraph 7(b) Page 10 of the file thereof, it appears that the fact that in the process of activities engaged in part by the petitioner, the petitioner also received some payments, reimbursements and royalties based, weighed heavily with the central government in deciding that the petitioner fell into the category of ‘other institutions’. However, this may not be the correct approach inasmuch as section 10(21) and in particular the third proviso thereto recognises a situation where the research association could have profit and gains from business also. In fact, the proviso goes to the extent of saying that the exemption under section 10(21) would apply even to profits and gains of business of a research association provided the business was incidental to the attainment of its object and separate books of accounts were maintained in respect of such business. Therefore, the fact that the petitioner also received certain payments towards royalty, service charges, etc. would not in itself mean that the petitioner was not a scientific research association. Thus the issue should be considered by the central government afresh in the manner indicated above and in accordance with law.
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