2012 (12) TMI 611

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....h is contrary to the statute? 2. Section 10(21) provides for exemption of any income of a scientific research association which is approved under section 35(1)(ii). The first proviso, however, makes the exemption subject to the provisions of sub-sections (2) and (3) of section 11 of the Act. Section 11(3) provides for certain contingencies in which the accumulated income of the scientific research association which was granted exemption over a period of years would become taxable. On the happening of any of the contingencies provided for, the accumulated income which earlier enjoyed exemption "shall be deemed" to be the income of the scientific research association of the previous year in which the contingency happened. It does not matte....

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....earch Centre Ltd. Chandigarh which is a subsidiary of Escorts Ltd. Escors Ltd. was the main promoter of the EHIRC, New Delhi and had also contributed Rs.60 lacs on 30.12.81. Therefore, EHIRC New Delhi has violated the provisions of section 13(2)(g) read with section 13(3)(b) of the Income Tax Act, 1961. Section 11 & 12 no more remain applicable as the society no longer remains a charitable institution. Thus it is established that the society applied the accumulated income for purposes other than charitable (violation of section 13). The EHIRC, New Delhi has also violated the guidelines for approval u/s 35(1)(ii) for recognition of Scientific and Industrial research, the approval granted needs to be withdrawn with retrospective effect. ....

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....the assessments. These have been considered. The precise question that arises for our consideration has been formulated in the beginning of our order. Even assuming that there was breach of any statutory conditions under which the exemption was granted to the petitioner under section 10(21), the entire accumulated income of the earlier years cannot be taxed in those years by reopening the assessments for those years. Section 11(3), which is made applicable to section 10(21), itself provides that the entire accumulated income shall be deemed to be the income of the assessee of the previous year in which the breach of the conditions or the contingency occurs. The statute having thus fixed the assessment year in which the entire past accumulat....