Income of research associations approved under section 35(1)(ii) [Section 10(21)] :

This clause also provides for exemption in respect of any income of research associations which are approved under section 35(1)(ii)/(iii). This exemption has however, been made subject to the following conditions:

(i) It should apply its income or accumulate for application wholly and exclusively to it s objects and provisions of section 11(2) and (3) would also apply in relation to such accumulation.

(ii) The association should invest or deposit its funds in the forms or modes specified in section 11(5). This condition would however not apply to –

(1) any assets held by the research association where such assets form part of the corpus of the fund of the association as on 1-6-1993;

(2) any debentures of a company acquired by the association before 1-3-1983;

(3) any bonus shares coming as an accretion to the corpus mentioned above;

(4) voluntary contributions in the form of jewellery, furniture or any article notified.

(iii) The exemption will not apply to income of such association which are in the nature of profits and gains of business unless the business is incidental to the attainment of its objectives and separate books of account are maintained in respect of such business.

(iv) However, approval once granted may be withdrawn if at any time the Government is satisfied that –

(1) the research association has not applied its income in accordance with sections 11(2) and (3);

(2) the research association has not invested or deposited its funds in accordance with section 11(5).

Such withdrawal shall be made after giving reasonable opportunity to the assessee. A copy of the order shall be sent to the Assessing Officer as well as the assessee.