(2) The applicant university, college or other institution shall carry out scientific research, research in social science or statistical research through its faculty members or its enrolled students.
(3) A university or college or other institution approved under clause (ii) or clause (iii) of sub-section (1) of section 35 shall maintain separate books of account in respect of the sums received by it for scientific research or, as the case may be, for research in social science or statistical research, reflect therein the amount used for carrying out research, get such books of account audited by an accountant, as defined in the Explanation to sub-section (2) of section 288 and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139.
(4) The university or college or other institution shall maintain a separate statement of donations received and the amount used for research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to in sub-rule (3).
(4A) The university, college or other institution shall, by the due date of furnishing the return of income under sub-section (1) of section 139, furnish a statement to the Commissioner of Income-tax or Director of Income-tax containing—
(i) a detailed note on the research work undertaken by it during the previous year;(5) If the Commissioner of Income-tax or the Director of Income-tax is satisfied that the university or college or other institution,—
(ii) a summary of research articles published in national or international journals during the year;
(iii) any patent or other similar rights applied for or registered during the year;
(iv) programme of research projects to be undertaken during the forthcoming year and the financial allocation for such programme.
(a) is not maintaining separate books of account for research activities, orhe may after making appropriate enquiries furnish a report on the circumstances referred to in clauses (a) to (e) above to the Central Government within six months from the date of furnishing the return of income under section 139(1).
(b) has failed to furnish its audit report, or
(c) has not furnished its statement of the sums received and the sums used for research or a statement referred to in sub-rule (4A), or
(d) has ceased to carry on its research activities, or its activities are not genuine, or
(e) is not fulfilling the conditions subject to which approval was granted to it,
Reference/Source: Check at Income Tax site for latest version of the Rules - link