CENTRE FOR DEVELOPMENT OF TELEMATICS Vs. UOI

JUDGEMENT

(1.) In this writ petition the question that has been raised is whether the petitioner (Centre for Development of Telematics C. DoT) is a 'scientific research association' for the purposes of clause (ii) of subsection (1) of section 35 of the Income Tax Act, 1961 (hereinafter referred to as 'the said Act'). If the petitioner is regarded as such a research association, any income of the petitioner would be not included in the total income by virtue of section 10(21) of the said Act.

(2.) Section 35(1)(ii) deals with two categories of institutions. One category is that of a 'scientific research association' which has as its object the undertaking of scientific research and the other category is that of a University, College or other institution which undertakes some amount of scientific research. The petitioner is aggrieved by the fact that it has been placed in the second category of 'other institutions' partly engaged in scientific research. According to the petitioner, it should be placed in the former category of a 'scientific research association' in as much as according to the petitioner its sole object is of undertaking research. The case of the petitioner is that while it receives certain royalty and support services fee and consultancy charges, those are ancillary to its sole object of undertaking scientific research. As such, it ought to be categorised in the category of a 'scientific research association' as contemplated in section 35(1)(ii) of the said Act.

(3.) The learned counsel for the petitioner drew our attention to section 35(3) of the said Act and submitted that if any question arises as to whether and, if so, to what extent any activity constituted scientific research, the Board is required to refer the question to the central government and that the decision of the central government would be final. According to the learned counsel for the petitioner, in the present case, the Board has not made any such reference to the central government and the central government has also not taken a definitive decision as to why the petitioner does not fall within the category of 'scientific research association'. He, therefore, submitted that the stand of the central government in categorising the petitioner as 'other institution' partly engaged in scientific research has been done without considering and rejecting the petitioner's claim that it falls in the category of 'scientific research association'. He also submitted that the petitioners' case was only considered from the standpoint of whether the petitioner was an 'other institution' and not from the standpoint of whether the petitioner fulfilled the criteria for being recognised as a 'scientific research association'.