TMI Tax Updates e-Newsletter
Aug 01,2015

Validity of Settlement Commission order under subsection 2C of Section 245D challenged - respondent No.1 has paid tax only on the additional income offered before the Settlement Commission and the tax payable on the additional income offered in the returns of income has not been paid by the respondent No.1 on or before filing the settlement application - Held that:- In simple terms, where an assessee has furnished return of income and applies for settlement of his case, one has to calculate his total income for the purpose of the said provision by aggregating the total income returned and the income disclosed in the application. Applicant's liability to pay additional tax would be the amount of tax calculated on such total income minus the amount of tax calculated on the total income returned for that year.Sub-section (1B) and (1C) of Section 245 C thus provide for a special formula for arriving at an applicant's liability to pay additional tax for maintaining an application for settlement. Such special formula contains a deeming fiction. Such deeming fiction for the purpose of calculating additional tax payable defines term "total income" in artificial manner.

In the present case, legislature has created a deeming fiction by providing that the tax of the applicant would be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income. this device is created for a special purpose and has a localized effect. It comes into existence only for the purpose of calculating the tax to be deposited by an applicant for settlement of a case. In such a situation, the aggregate of the total income returned and the income disclosed would be considered as total income.

Under the circumstances, the contention of the Counsel for the respondent No.1 that the term "total income" should be construed as defined under Section 5 of the Act for the purpose of calculating additional tax of an applicant for settlement of a case cannot be accepted.

In the present case, formula which contains a special definition for a special purpose would, therefore, have its effect only for Section 245C. Being a special provision it would prevail over any other general term of a concept contained in the Act. Section 245 C (1) of the Act also requires the applicant to provide besides other details, true and full disclosure of his income which has not been disclosed before the Assessing Officer and amount of income tax payable on "such income". Reference to "such income" thus is the income disclosed in the settlement application which was not disclosed before the Assessing Officer.

We uphold the contentions of the Revenue by holding that the assessee had not paid the self-assessment tax in the return of income under Section 153-A and 143(2) of the Act for the assessment years 2007-08 to 2012-13, the application was not valid and quashed the order passed by the Settlement Commission, Mumbai - Decided in favour of revenue.

Reopening of assessment - Under invoicing of the exports and income arising out of mining is an illegal incomeHeld that:- The objection filed by the petitioner to the reasons recorded in support of the impugned notice, very categorically states that they do not hold any mining leases as they are only in the business of buying ores, processing it and exporting the processed iron ore. Thus, the second ground/ reason recorded in support of the notice viz. illegal mining does not apply. However, order dated 20/02/2015, while disposing of the objections, does not deal with the above objection. On the contrary, the order dated 20/02/2015 disposes of an imaginary objection, not taken by the petitioner, by a reasoned order. The least that is expected of Assessing officer while disposing of the objections filed by the Assessee is some application of mind to the objections raised by the Assessee and in that context, take a relook at the reasons recorded in support of the reopening notice.

On such a fundamental lapse on the part of the Assessing Officer in disposing of the objections was pointed out to us, we expected the State-Revenue would withdraw the order and crave liberty to pass a fresh order dealing with the objections of the petitioner. Therefore, we decided to set aside the order of the Assessing Officer disposing of the objections to the impugned notice - Decided in favour of assessee for statistical purposes.

Pre-capitalization expenses towards expansion of its business disallowed - ITAT allowed claim - Held that:- As decided in Jay Engineering Works Ltd. v. CIT [2007 (10) TMI 286 - DELHI HIGH COURT] semingly diverse and disparate lines of business can yet be treated as part of the same business provided certain important parameters are kept in mind - that both should have common management and that the funds used for the purposes of the existing business as well as the new entity should be common - There can be no dispute that new venture was managed from common funds -

This Court notices that in Jay engineering (supra) itself, the Challapalli (1974 (10) TMI 3 - SUPREME Court), as relied upon by Revenue holding was noticed and at the same time distinguished in the light of the previous ruling in India Cements Ltd. v. CIT [1965 (12) TMI 22 - SUPREME Court]. The important point of distinction noted by the Court in Jay Engineering (supra), to say that Challapalli (supra) was inapplicable, was that in that case the assessee had borrowed considerable sums of money for installation of plant and machinery, and interest was sought to be loaded on the cost of plant and machinery. The AO had rejected the assessee’s claim and held that interest was an important part of revenue expenditure and no depreciation could be claimed as was done in that case. The assessee’s contention in that respect was accepted by the Supreme Court. - Decided against revenue.

Tax Collection at Source (TCS) u/s 206C - import of timber from abroad - assessee-in-default - circumstances under which ss. 44AC and 206C were brought into the statute book about 2 1/2 decades ago and the subsequent deletion of s. 44AC alone, w.e.f. 1st April, 1992; however retaining s. 206C - Held that:- Though 'timber' under specified circumstances was intended to be included under s. 44AC, in the context of fixing presumptive income, it cannot be said that it has lost its significance, on deletion of s. 44AC, as it stands separately covered and dealt with under s. 206C clubbing along with several other items including 'tendu leaves' and 'scrap' for collection of tax at source. In other words, the law makers had independent application of mind with regard to the items, which were to be included under s. 206C, in respect of which tax had to be collected at source at the specified rate, which includes 'timber' as well. This being the position, the contention of the petitioners that the circumstance under which s. 44AC was incorporated and the consequence in furtherance to deletion of the said provision w.e.f 1st April, 1992 is having a bearing with regard to the exigibility of tax to the very same item mentioned in the Table under 206C, is having no merit or significance.

Collection of tax at source is discernible under other similar circumstances as well, as referred to hereinbefore. This being the position, the circumstance under s. 44AC was introduced or the consequence of deletion of the said provision w.e.f. 1st April, 1993, cannot have a bearing in non- satisfying the requirement by the concerned dealers under s.. 206C of the Act, in respect of the commodities specified in the 'Table' given under the said provision.For clarity and convenience, rate of tax to be collected is also specified under s. 206C, in respect of the concerned commodities, to be adjusted against the actual tax payable by the buyer under the regular assessment. This being the position, the source from which 'timber' came to the hands of the petitioners does not have any relevance at all, and it very much satisfies the term "obtained by another mode", as envisaged under the relevant provisions of law. The version of the petitioners is that it has to be read and understood giving restrictive meaning referring to the circumstances under which s. 44AC was introduced w.e.f 1st April, 1988, does not hold any water at all.

This Court does not find any merit in the writ petitions and no ground raised in support of the same could be held as tenable. - Decided against assessee.

Calculation of interest under s. 220(2) - starting point or the commencement of the period from which the interest has to be calculated under sub-s. (2) of s. 220 - quantification of the interest payable on the amounts demanded in the notice issued under s. 156 - Held that:- The outstanding dues, have to be paid within a period of thirty days from date of service of notice, failing which to pay simple interest at one end one-fourth per cent for every month or part of a month from the date commencing after end of the period specified in accordance with law. Sec. 220 states that the period specified in sub-s. (1) of s. 220 of the Act is, thirty days from the date of service of notice, within which outstanding dues have to be paid. If that amount is not paid, then the assessee shall be liable to pay simple interest as stipulated under sub-s. (2) of s. 220 of the Act.

Sales Tax Subsidy - revenue v/s capital receipt - tribunal had decided the issue against the assessee - Held that:- Apex Court in CIT vs. Ponni Sugars and Chemicals Limited, (2008 (9) TMI 14 - SUPREME COURT) and Sahney Steels & Press Works Limited and others vs. CIT, (1997 (9) TMI 3 - SUPREME Court) adjudicated similar issue and held that for determining the nature of receipt of subsidy, the purpose test is to be applied. In other words, it has been laid down that the purpose for which subsidy has been paid will be the determinative factor for ascertaining the nature of receipt i.e. capital or revenue. The aforesaid decision was followed by this Court in ITA No.679 of 2010, The Commissioner of Income Tax v. Siya Ram Garg HUF [2010 (12) TMI 955 - Punjab and Haryana High Court]. Accordingly, the matter is remanded to the Tribunal to pass a fresh order after hearing the parties in view of the decision of the Apex Court in Ponni Sugars's case (supra) in accordance with law. - Decided in favour of assessee for statistical purposes.

Disallowing the interest under section 36(1) (iii) on interest free loans granted to sister concern - Held that:- Hon’ble Apex Court in S.A.Builders’s case (2006 (12) TMI 82 - SUPREME COURT) held that the commercial expediency is to be seen for allowing or disallowing the deduction under Section 36(1) (iii) of the Act where interest free loans had been advanced to sister concern. In the present case, since the Tribunal had not decided the issue by recording any finding whether there was commercial expediency or not, the matter requires to be remitted back to the Tribunal to decide this issue also afresh.- Decided in favour of assessee for statistical purposes.

Assessment proceedings transferred to Ghaziabad - retransfer from Patiala to Ghaziabad - Held that:- Persuing the impugned order we satisfied that it does not meet the parameters of an order required to be passed under Section 127(2) of the Act.

Apart from use of the words “Coordinated Investigation” and “Administrative Convenience”, the order does not record the nature of “Coordinated Investigation” and “Administrative Convenience”, that necessitated transfer. This apart as assessment proceedings were transferred from Delhi to Patiala no reason has been assigned for their retransfer to Ghaziabad. The mere use of the words “Coordinated” and “Administrative Convenience ” does not absolve the department of its obligation to assign reasons, howsoever brief and in reasons that compelled the revenue to order transfer from Delhi to Patiala and then from Patiala to Ghaziabad. The words “Coordinated Investigation” and “administrative coordination” are not a magic wand that the revenue can waive without intimating the reasons underlying the need for transfer. The question is not whether an order is quasi judicial or administrative but whether rights of a party can be adversely effected, without assigning any reason? The answer to this question is obviously that reasons, howsoever brief must be assigned before passing such an order. It would be appropriate to point out that nine assessees reside in Punjab. Thus set aside the impugned order and direct the Commissioner of Income Tax, Ludhiana to pass a fresh order - Decided in favour of assessee .

Grant of registration u/s. 12AA rejected - consequent rejection of approval u/s. 80G(5) - Held that:- Trust/institution having charitable and religious objects will also be eligible for exemption u/s. 11, unless hit by restrictions imposed u/s. 13(1)(a) or 13(1)(b) of the Act. The DIT(E) has not brought any material on record to show that provisions of Section 13(1)(a) or 13(1)(b) applies to assessee, denial of registration u/s. 12AA for alleged violation of Section 11 in our view is not justified. Moreover, applicability of Section 13 of the Act can be looked into by the AO at the time of assessment proceedings and not by the DIT(E) while exercising power u/s. 12AA of the Act. Moreover, at present assessee also excluded the three object clauses objected to by the DIT(E). Therefore, the objections raised by DIT(E) does not survive. In view of the above, we are inclined to set aside the impugned order of DIT(E) and direct him to grant registration to the appellant-trust u/s. 12AA of the Act from the period it applied for registration. See Shiva Shakthi Shiridi Sai Anugraha Mahapeetam Versus Dy. Director of Income-tax (Exemptions), Hyderabad [2014 (12) TMI 250 - ITAT HYDERABAD]

Since the DIT(E) refused approval u/s. 80G only on the reason that registration u/s. 12AA was denied to assessee, we direct the DIT(E) to examine the application and grant registration u/s. 80G, if other conditions are satisfied. - Decided in favour of assessee for statistical purposes.

Provision for bad and doubtful debts in computing book profit u/s.115JB - computing the income under the MAT provisions - Held that:- In the facts of the case of Echjay Forgings (2001 (2) TMI 56 - BOMBAY High Court) were that in computing the book profits of the assesseecompany under section 115JB of the Act,the AO had disallowed the deductions claimed by the assessee on account of payment of wealth-tax,provisions for doubtful debts, gratuity, bonus and amounts debited to the profit and loss account in respect of foreign exchange rate difference, on the ground that the above items were to be added back to the net profit as shown in the profit and loss account under the Explanation to section 115J(1A) .The Tribunal held that the disallowances made by the Department under section 115J were impermissible. - Decided in favour of assessee.

Addition in respect of provision for Director's Retirement Benefit in computing Book Profit u/s.115JB - Held that:- Addition of Provision for discretionary terminal benefits in the form of additional gratuity in computing Book Profit u/s 115J had been deleted by the Tribunal in assessee's own case in AY. 1990-91 as relied upon the cases of National Hydro Electric Power Corporation(2010 (7) TMI 969 - PUNJAB AND HARYANA HIGH COURT),Hewlett Packard India (P.) Ltd.(2008 (3) TMI 23 - HIGH COURT OF DELHI ),Bechtel India (P) Ltd.(2007 (11) TMI 2 - HIGH COURT , DELHI)and Dresser Valve India (P) Ltd.(2009 (4) TMI 535 - ITAT MUMBAI)- Decided in favour of assessee.

Computing of Book Profit u/s.115JB with regard to expenditure incurred by the assessee on Voluntary Retirement - Held that:- FAA is based on the judgment of the Hon’ble Supreme Court and the Tribunal has in the case of Nicholas Piramal India Ltd.(2013 (11) TMI 934 - ITAT MUMBAI) has decided the issue of VRS in favour of the assessee.So,in our opinion,his order does not suffer from any legal infirmity.- Decided in favour of assessee.

Addition made in respect of Capital Expenditure debited to P&L account in computing book profit u/s 115JB - CIT(A) deleted addition - Held that:- Expenditure had been disclosed in Clause 17(a) of the tax Audit Report and same were added to total income while computing income under the normal provisions of the Act.The AO made the addition of the above items under the MAT provisions.The FAA deleted the addition relying on the decision of the Apex Court in Apollo Tyres Ltd. (2002 (5) TMI 5 - SUPREME Court ). Following our orders for the earlier grounds,we dismiss this ground also,as it also deals with computation of income u/s.115JB of the Act. - Decided in favour of assessee.

Addition made in respect of Revenue generated from trial run production in computation of Book Profits u/s.115JB - CIT(A) deleted addition - Held that:- Treatment in the books of accounts was is as per guidance note issued by the Institute of Chartered Accountants of India,that same was not disputed by the AO,that the addition made by him was not tenable in view of the decision of the Apex Court in the case of Apollo Tyres Ltd.(2002 (5) TMI 5 - SUPREME Court).- Decided in favour of assessee.

Allowance of expenditure on temporary structures at customer’s site - FAA held that the expenditure had been incurred for setting up temporary arrangement for providing RMC to the contractors at their location,that it was s revenue in nature and was incurred wholly and exclusively for the purpose of business - Held that:- Tribunal has dealt the issue while deciding the appeals for the AY.2000-01 that the expenditure had been incurred for setting up temporary arrangement for providing RMC to the contractors at their location,that it was s revenue in nature and was incurred wholly and exclusively for the purpose of business.- Decided in favour of assessee.

Disallowance made in respect of 43B - CIT(A) deleted addition - Held that:- Second proviso to Sec.43B,which provided for disallowance of employer's contribution to any fund for the welfwere of employees if not paid before the due date specified in Sec.36(1)(va)was deleted by the Finance Ac, 2003,that the issue was favorably covered by the decision of Hon'ble Apex Court delivered in the case of Alom Extrusions Ltd.(2009 (11) TMI 27 - SUPREME COURT )wherein it was held that omission of second proviso and the corresponding amendment of first proviso by Finance Act, 2003,were curative in nature and were effective retrospectively w.e.f. 1st April, 1988, that the contribution of ₹ 5, 00, 790/- had been deposited before the due date of filling of Return of income u/ s 139(1), deduction should be allowed in computing taxable income - Decided in favour of assessee.

Subsidy received from Government of West Bengal - Whether the amount received by the assessee was not allocable towards any capital asset and was in the nature of incentive which was a taxable receipt? - Held that:- FAA had relied upon various case laws and decided the issue without examining the whole scheme.On a query by the Bench the AR informed that the matter of Reliance Industries Ltd. [2003 (10) TMI 255 - ITAT BOMBAY-J ] was sent back by the Hon’ble Supreme Court to the Hon’ble Bombay High Court to decide afresh after considering the provisions of the scheme.In our opinion,any scheme in itself cannot be treated revenue or capital in nature-to arrive at a definite conclusion one has to consider the scheme in entirety.We feel that the issue needs further investigation.Therefore,in the interest of justice,the issue is restored back to the file of the AO who would decide the matter after affording a reasonable opportunity of hearing to the assessee and after analysing the scheme - Decided in favour of revenue for statistical purposes.

Provision for deferred tax - Held that:- FAA had,after verifying the fact,deleted the addition and therefore in our opinion there is no infirmity in his order.So,confirming his order ground raised by the AO is rejected. - Decided in favour of assessee.

Disallowance of discarded capital assets and Cost of dismantling - CIT(A) deleted addition - Held that:- The identical claim for earlier years in Assessee’s own case had been allowed by ITAT in AY.s.1991-92 to 92-93,96-97,97-98 & 99-00 had not been challenged before the Hon’ble High Court.- Decided in favour of assessee.

Deletion of interest levied u/s.234D -s consequential in nature and hence needs no interference from our side. - Decided in favour of assessee.

Exclusion of non compete fees and compensation of termination of contract received on sale of shweres of Float Glass Ltd.as capital receipt and hence not part of sales consideration in computing Long Term Capital Gain - Held that:- The case of Wintac Ltd.(2013 (11) TMI 732 - KARNATAKA HIGH COURT)the Karnataka High Court had, following the judgment of Guffic Chem (2011 (3) TMI 6 - Supreme Court) held that the compensation received for restraining the assessee from carrying on competitive business was a capital receipt.is well settled that a liability cannot be created retrospectively. In the present case, compensation received under the noncompetition agreement became taxable as a capital receipt and not as a revenue receipt by specific legislative mandate vide section 28(va) and that too with effect from April 1, 2003. Hence, the said section 28(va) is amendatory and not clarificatory.

On issue of Compensation for termination of the contract AR correctly stated that the compensation for termination of contract was akin to consideration received for transfer of right to carry on the business,that right to carry on any business was taxable as capital gain w.e.f A.Y. 2003-04,that the above receipt should be treated as capital receipt. - Decided against revenue.

Provision for contingencies in computation of Book Profit u/s 115JB - Held that:- During the course of hearing before us,the AR fairly conceded that the issue was covered against it due to insertion of clause (i) to Expl.1to Sec.115 JB vide Finance Act, 2009 w.r.e.f.01-04-2001.- Decided in favour of revenue.

Profit on sale of fixed assets in computation of book profit u/s 115JB - assessee had claimed exclusion of Profit on sale of Fixed Assets(Net)in computing Book Profit - Held that:- In the absence of any provision for exclusion of capital gains exempted in the computation of book profit under the provisions contained in Explanation to s. 115JB of the Act, the assessee is not entitled to the exclusion thereof as claimed. We, therefore, answer the question referred to us against the assessee and hold that in the absence of any provision for exclusion of exempted capital gain in the computation of book profit under the provisions contained in Explanation to s. 115JB of the Act, the assessee is not entitled to the exclusion thereof as claimed - Decided in favour of revenue.

Claim of additional gratuity on provision basis - Held that:- The issue was decided in favour of the assessee in the earlier AY.s - Decided against revenue.

Interest u/s.234B on short payment of advance tax over assessed tax - CIT(A) deleted addition - Held that:- AR correctly relied upon the case of Jupiter Bio-Science Ltd.(2011 (8) TMI 268 - KARNATAKA HIGH COURT ) and argued that the amendment with retrospective effect became part of the Act after the assessee had filed its return of income,that at the time of filing of return the assessee was not liable to pay advance tax.- Decided against revenue.

Addition in respect of provision for Director's Retirement Benefit in comput -ing income under normal provisions of the Act - Held that:- The issue of a certain business liability was deliberated upon and adjudicated by the Hon’ble Apex Court in the case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME Court] and it was held that if a business liability had definitely arisen in the accounting year and was capable of being estimated with reasonable certainty, the deduction should be allowed although the liability may have to be quantified and discharged at a future date.- Decided against revenue.

Deduction u/s 35DDA - Held that:- There is no doubt that the assessee was entitled to the deduction and it had not claimed the same in the return.It is also a fact that before the FAA it lodged its claim. FAA had rightly allowed the claim raised by the assessee. See case of Pruthivi Brokers and Shareholders P.Ltd [2012 (7) TMI 158 - BOMBAY HIGH COURT] - Decided against revenue.

Reducing the total income to less than returned income - Held that:- The issue is directly covered by the judgment of Gujarat Gas Co.Ltd.the Hon’ble Gujarat High Court(2000 (4) TMI 19 - GUJARAT High Court )wherein it had been held that CBDT Circular No. 549 dated 31st Oct,1989 providing that the assessed income should not be less than returned income was ultra vires the Board's powers and that the AO was not bound by the same.AO was to assess the correct tax liability in accordance with law and even that if there was wrong admission of income by the assessee,it would not binding on the assessee - Decided against revenue.

Unutilised MODVAT credit added to the closing stock without making similar addition in opening stock - FAA deleted addition - Held that:- We are unable to understand the logic behind filing the appeal by the AO and its authorisation by the CIT concerned.The AO has not only refused to follow the directions of the FAA but also choose not to file appeal before the Tribunal against the direction.Thus,the issue had attained finality.When the assessee found that the AO had not followed the directions of the FAA he was compelled to file appeal before the FAA for the same issue for the second time.The FAA rightly held that MODVAT credit attributable to closing stock should be deleted.At that stage also if the AO and the CIT had stopped,the unwanted and frivolous litigation would have not taken place.- Decided against revenue.

Non exclusion of profit on sale of investments in computing Book Profit u/s.115JB - Held that:- The Tribunal decided the issue against the assessee while adjudicating the appeals for the AY.s.1998-99,99-2000,2001-01.We find that the Hon’ble Bombay High Court has dealt the issue of non exclusion of profit on sale of investments in computing Book Profit u/s.115JB of the Act,in the case of Veekaylal Investment Co. P. Ltd. (2001 (2) TMI 117 - BOMBAY High Court) wherein held while computing the book profits under the Companies Act, the assessee has to include capital gains for computing the book profits under section 115J . Even under clause 3(xii)(b) of Part II of Schedule VI to the Companies Act, 1956, profits or losses in respect of transactions or transactions of an exceptional or nonrecurring nature are to be disclosed. This shows clearly that capital gains should be included for the purposes of computing book profits - Decided against assessee.

Written off insurance and railways claims - Held that:- The matteR is covered in favour of the assessee by the judgment of Morgan Securities & Creditors(P.)Ltd. [2006 (12) TMI 106 - DELHI High Court] . Assessee was entitled to the deduction on account of bad debts in the previous year in which it had been written off in the books. Identical issue had been sent back to the file of the AO by the Tribunal while deciding the appeals for the AY.s.2000-01 and 2001-02. - Decided in favour of assessee for statistical purposes.

Fringe benefit tax u/s 115WE - VALUE OF FRlNGE BENEFITS ON ACCOUNT OF EXPENSES RELATED TO AIRCRAFTS - Held that:- On the contention of the assessee that there is no consideration for employment, we find that the assessee had submitted before the CIT(A) that there is a possibility of the aircraft having being used for benefit of the employees. When the assessee admits of a possibility of the air craft having been used for the use of benefit of employee, to plead otherwise at this stage cannot be countenanced. The assessee has not provided any evidence in support of this contention.

The assessee has in the earlier assessment years, consistently filing FBT returns and paying tax on the very same expenditure. During the current year, the assessee has originally filed a FBT return and offered the sum in question to tax. It was only thereafter a revised return is filed making a claim specifically for exemption u/s 115WC(2)(f). Now that the assessee has conceded that it is not eligible for exemption u/s 115WC(2)(f), the amount declared in the return of income before claiming this exemption will become taxable. - Decided against assessee.

Consideration towards sale of shares received - Addition to income - Held that:- The inference drawn by the tax authorities that the letter was acted upon by the parties and the amount of ₹ 2.00 crores represented the value of 7.5% of the share holding is not supported by any material. On the contrary, a combined reading of MOU and the letter written by Shri V. Prabu Kishore would show that there is a possibility to infer that the amount of ₹ 2.00 crores was a consolidated amount agreed to be paid towards the value of shares as well as for non-compete agreement. The very fact that Shri Janakiram continue to work in the Varun motor groups shows that the MOU was not given effect to and consequently, there is merit in the contentions of the assessee that the letter written by Shri Prabu Kishore was not acted upon. We have earlier noticed that the tax authorities have drawn inferences without bringing any material on record. Under these set of facts, we are of the view that the Learned CIT(A) was not justified in treating the amount of ₹ 2.00 crores as the sale consideration towards the shares transferred by the assessees. Since we have held that the surrounding circumstances show that the MOU / letter was not given effect to and the amount of ₹ 2.00 crores does not represent the sale value of shares alone, we do not find it necessary to deal with the question of actual receipt/payment or accrual.

We are unable to agree with the conclusions reached by Learned CIT(A). Accordingly, we set aside the orders passed by Learned CIT(A) in the hands of both the assessees herein and direct the Assessing Officer to delete the impugned addition contested by both the assessees. - Decided in favour of assessee.

Income earned from exploitation of commercial space - whether has to be assessed under the head 'Income from House Property' or 'Profits and Gains of Business & Profession' - Held that:- no hesitation to hold that the main object of the present assesssee company was not to earn rental income from letting of property which was purchased in FY 2001-02 and let out in FY 2002- 03 temporarily till the company gets sufficient profits from its main business activity with cautious decision of Board of Directors of the company dated 14.1.2003 with the intention to reduce burden of expenditure and losses suffered by the assessee company right from its incorporation during preceding three years. The present case clearly falls on all four corners within the dicta of the constitutional bench of Hon’ble apex court in the case of Sultan Brothers Ltd. vs CIT (1963 (12) TMI 4 - SUPREME Court ) as the assessee company let out the shop situated at Sector 18, Noida not as per main objects of the assessee company and the same was let out in the third year of business operations temporarily when the assessee company could not earn income from its main object in spite of their best efforts. At this juncture, the ratio of the decision of Hon’ble Special Bench, ITAT, Delhi in the case of Atma Ram Properties (P) Ltd. [2006 (4) TMI 196 - ITAT DELHI-C] also supports the case of the revenue wherein it was held that rental income derived by assessee company of letting out property simplicitor was chargeable to tax under the head income from house property and not as business income irrespective of the fact that the assessee company was doing business of acquiring, developing and selling properties because the rental income accrued to the assessee company only because of ownership of the property and not by exploitation of rented property by way of complex commercial activity. we are inclined to hold that the view taken by the AO and upheld by the CIT(A) is quite justified and reasonable. - Decided against assessee.

Admission of additional evidence objected - Held that:- In the present case, the assessee has not placed any sufficient reason which prevented it in filing documents/evidence during assessment proceedings which was filed subsequently before CIT(A) as additional evidence under Rule 46A. The assessee was given due opportunity of hearing before the AO, hence the AO rightly objected to the admission of additional evidence and the CIT(A) was quite justified in rejecting the same.

Whether CIT (A) erred in considering letter dated 22.8.2008 filed by Shri Sanjeev Bhardwaj, who was never authorized by the assessee company to file such a letter? - Held that:- In view of unrebutted affidavit of the Director of assessee company and other facts and circumstances, we hold that the AO is not allowed to treat the rental receipts of the assessee company as income from house property without considering and ignoring the other relevant facts and circumstances only on the basis of letter dated 22.8.2008 which was not field on the instructions of the assessee. Therefore, we are inclined to accept the contention of the assessee that the letter dated 22.8.2008 cannot be held as filed on behalf of the assessee and on the instruction of the assessee company. The conclusion of the AO cannot be held as sustainable in treating the rental receipts of the assessee company as income from house property instead of business income, as claimed by the assessee only on the basis of impugned letter dated 22.8.2008 which was not filed on the instructions of the assessee company in view of our foregoing discussion. - Decided in favour of assessee.

Disallowance of expenses claimed in the profit and loss account on account of accounting charges, bank charges, general expenses, telephone expenses, preoperative expenses written off, staff welfare, lease rent expenses, maintenance charges, printing and stationery, remuneration to Director, salary and remuneration - Held that:- respectfully following the ratio of the judgments of Hon’ble Supreme Court in the case of CIT vs Rajendra Prasad Moody (1978 (10) TMI 133 - SUPREME Court ), we hold that it is not necessary that any income should, in fact, have been earned as a result of expenditure and expenses incurred by the assessee to maintain its corporate and legal existence cannot be disallowed merely because no income has been earned as a result of activities conducted and expenditure incurred by the assessee company during the relevant period. With the above proposition, the issue of allowability of expenditure claimed by the assessee in the Profit and loss account, which were disallowed by the AO and upheld by the CIT(A), is restored to the file of AO for proper examination and verification after affording due opportunity of hearing for the assessee and without being prejudiced or influenced with the earlier assessment and impugned order on this issue - Decided in favour of assessee for statistical purposes.

Disallowance of set off of brought forward assessed business losses - Held that:- Since by the earlier part of this order on ground no. 1, we have held that the rental income of the assessee company deserves to be treated as income from house property instead of business income as claimed by the assessee, therefore, business loss cannot be set off against the income from house property and conclusion of the CIT(A) was correct on this issue. However, we further make it clear that the AO is empowered to provide proper treatment to the brought forward losses as per relevant provisions of the Act in the present AY 2006-07 and also in the subsequent assessment years. Accordingly, ground no. 3 of the assessee is dismissed with the aforesaid directions of the AO to provide proper, reasonable and justified treatment to the same in accordance with law and relevant provisions of the Act.

Availability of assumption of jurisdiction for initiation of proceedings and issuance of notice u/s 147/148 challenged - additional ground - Held that:- Assessee is devoid of merits as notice u/s 148 of the Act in this case relevant to AY 2006-07 was issued on 25.9.2008 which is very well within the prescribed time limit as per provisions of section 149(b) of the Act. As we have already noted that the assessee did not place his wiliness or desire before the AO after receipt of notice u/s 148 of the Act until completion of reassessment proceedings on 27.11.2009, seeking copy of reasons recorded, therefore, the assessee is not entitled for any benefit in this regard. In the facts and circumstances of the present case, we hold that the AO validly assumed jurisdiction for initiation of reassessment proceedings u/s 147 of the Act and issuance of notice u/s 148 of the Act as there was valid reason to believe that the income has escaped assessment on the issue of treatment of rental income. Therefore, we decline to accept the legal contention of the assessee that the reopening of assessment was not valid, void ab initio and bad in law. - Decided against assessee.

Disallowance of group gratuity insurance premium u/s.40A(9) - Held that:- Tribunal in assessee’s own case for A.Y. 2007-08 and A.Y. 2008-09 decided the issue against the assessee on the ground that no such approval has been received from the CIT till date. In view of the above and following the decision of the Coordinate Bench of the Tribunal in assessee’s own case for the preceding two assessment years, the grounds raised by the assessee on this issue are dismissed. - Decided against assessee.

Addition on account of receipt of cash from M/s. Rajendra Trading Company - Held that:- find merit in the submission of the Ld. Counsel for the assessee that when the office of the assessee was simultaneously searched on the very same date and since no iota of evidence was found from the office of the assessee to show that it has received any unaccounted cash, therefore, merely on the basis of statement given by Shri Rajendra S. Raka, which has been retracted subsequently, cannot be the basis of any addition in the hands of the assessee. In this view of the matter, we hold that the CIT(A) was not justified in sustaining the addition made by the Assessing Officer amounting to ₹ 16,83,500/- on account of unaccounted cash received by the assessee from Shri Rajendra S. Raka of M/s. Rajendra Trading Company. - Decided in favour of assessee.

Disallowance on account of loss on account of forgery - Held that:- The assessee company is not authorised to carry on the business of hire purchase of vehicles as per Memorandum and Articles of Association. No steps have been taken to revise the Memorandum and Articles of Association following the Board Resolution dated 02-02-2009. The assessee purportedly rented out the cars on 25-02-2009 when the payment had not been made nor the physical ownership transferred to the assessee. No remedial measures have been taken to recover loss of ₹ 36 lakhs which is substantial amount. Not even a Police FIR has been registered by the assessee nor any criminal complaint filed against the suspect. The loss does not pertain to the impugned assessment year as the first instalment of ₹ 14,40,000/- was made through RTGS on 19-03-2009. Accordingly AO was justified in disallowing the loss claimed by the assessee u/s.37(1) as well as 36(1)(vii). The assessee could not controvert any of the observations given by the CIT(A) to substantiate the allowability of the claim. In absence of any valid argument by the Ld. Counsel for the assessee on this issue, we find no infirmity in the order of the CIT(A) upholding the addition made by the Assessing Officer which in the facts and circumstances of the case is legally justified and proper. - Decided against assessee.

Addition on Sale of Share Application Money - Held that:- No doubt the assessee remained non-cooperative before the AO as well as Ld. CIT(A), but after the reading of the affidavits filed by Smt. Sunita Jindal, W/o Late Shri Ravi Kiran Jindal and Smt. Swati Jindal, CA, Daughter in Law of Late Shri Ravi Kiran Jindal, Advocate in which they have stated that after the death of Late Sh. Ravi Kiran Jindal, Advocate, the employee of Late Sh. Ravi Kiran Jindal, has not properly pursued the matter before the AO as well as before the Ld. CIT(A) and they have decided the issue in dispute against the assessee in spite of the fact of the relevant evidence are available with the record. We are of the considered view that due to failure of the assessee’s counsel and due to unavoidable circumstances for non-producing the relevant evidence and non-appearance before the Revenue Authorities, assessee should not be suffered. Therefore, in the interest of justice, the issue in dispute is set aside De novo to the AO to decide the same afresh, under the law, after giving full opportunity to the assessee of being heard for substantiating its claim. - Decided in favour of assessee for statistical purposes.

Addition on difference in the opening and closing stock of work-in-progress - Held that:- As decided in assessee's own case for AY 2007-08 [2015 (7) TMI 717 - ITAT AHMEDABAD] it is well settled that the closing stock of earlier becomes the opening stock of succeeding year. In this view of matter and examining all aspects, it would be in the interest of justice if the assessing officer is directed to allow the closing stock of last year as the opening stock of current year. We accordingly, hereby direct the assessing officer to allow the closing stock of last year as the opening stock or current year. - Decided in favour of assessee for statistical purposes.

Adhoc disallowance of 10% of the expenditure on repairs and maintenance of plant and machinery - Held that:- AO in his assessment order in para-5 has observed that in the instant case, the assessee has simply furnished copy of ledger account of the plant & machinery repairs and maintenance expenses claimed during the year. Mere furnishing of the copy of the ledger account would not prove that the expenditure has been incurred wholly and exclusively for the purpose of the business. It is observed by the AO that no other supporting evidence has been produced for verification. It is transpired from the records that the assessee has not filed any supporting evidence in the form of bills or vouchers either before the AO or before the ld.CIT(A) and even before this Tribunal also no material has been placed suggesting that the assessee has incurred the said expenditure. Under these facts, we do not see any reason to interfere with the orders of the authorities below on this issue. - Decided against assessee.

Denial of refund claim - Unutilized CENVAT Credit - Notification No. 5/2006-CE (NT) dated 14.03.2006 - Held that:- The issue involved has been decided in favour of the appellants in earlier appeals under [2014 (4) TMI 288 - CESTAT AHMEDABAD]. The same was upheld by the Hon'ble Gujarat High Court under order [2015 (2) TMI 477 - GUJARAT HIGH COURT] which is after the date of filing of appeals by the Revenue. Once the issue has been settled by the jurisdictional High Court, the appeals filed by the Revenue do not survive. Accordingly, the appeals filed by the Revenue are rejected with direction that adjudicating authority should quantify refund amount in remand proceedings directed by the first appellate authority. - Decided against Revenue.

Penalties under Section 76, 77 & 78 - entire service tax along with interest and 25% penalty was paid by the appellant before the issue of Show Cause Notice - Held that:- It is a case of the appellant that penalties in excess of 25% penalty paid under Section 78 of the Finance Act, 1944 are not imposable, when the same has been paid before the issue of Show Cause Notice alongwith duty and interest. It is observed that as per Para 4 of O.I.A Dated 28.02.2013, passed by the first appellate authority, the entire amount of service tax alongwith interest and penalty of 25% was paid by the appellant during investigation. Under the provisions of Finance Act, 1944 when the entire amount of service tax alongwith interest and 25% penalty is paid before the issue of Show Cause Notice then there is no need to issue a Show Cause Notice. This means that no other penalty in excess of 25% penalty paid before issue of Show Cause Notice is imposable under Finance Act, 1944. In view of the above observations penalties imposed under Section 76, 77 and in excess of 25% under Section 78 of the Finance Act, 1944 are required to be set-aside and appeal filed by the appellant is required to be allowed to that extent. - Decided partly in favour of assessee.

Levy of penalty Renting of Immovable Property Service - Demand of service tax - Club or Association Service - Held that:- Demand of Service Tax on ‘Club or Association Service’ is not sustainable in view of the decision of Hon'ble Gujarat High Court.

The demand of tax on the other issues, the Appellants are not contesting the demand of tax, as they have already paid. Considering the facts and circumstances of the case, and the amount involved, we find that the tax on ‘Renting of Immovable Property Service’ was imposed on the basis of retrospective amendment. Hon'ble Delhi High Court struck down the levy, which was retrospectively amended by the notification.

Taking into consideration overall facts and circumstances of the case and as the Appellant already paid the tax, we find that it is appropriate to waive the imposition of penalties. - demand of Service Tax on ‘Club or Association Service’ alongwith interest and penalty is set aside. The demand of Service Tax alongwith interest in respect of the other services are upheld and penalties are set aside - Decided in favour of assessee.

Denial of refund claim - Notification No. 11/2005 ST dated 19.04.2005 - Rebate claim has been filed beyond the period of one year from the date of export - Held that:- appellant that they had provided promotion and marketing services to its over-seas group entity and correctness of this claim has not been examined at all. The original adjudicating authority could have asked for evidence in this regard. Instead he has chosen to simply observe that the invoice says "service fee". In the case of exports, the tax is not collected and appellants have paid the tax on the same and therefore the normal rules applicable to invoices may not be applicable since it is not the case of the department that appellant is claiming CENVAT credit where there are prescribed procedures.

In this case, what is required to be examined is whether tax has been paid or not and refund is admissible or not and export of services has taken place or not. Prima facie, I find that all these requirements have been fulfilled. Under the circumstances, the impugned order is set aside - Decided in favour of assessee.

Refund - determination of relevant date - Banking and other financial service - Held that:- From the proceedings initiated resulting in the OIO, it is seen that the Department had reopened the assessment for the entire period from 2001 onwards. Ultimately, the service itself was held not liable to tax at all. Having reopened the assessment in its entirety, demanding the entire amount of tax payable and appropriating whatever already has been paid, the net result is that the Departmental officers have reopened the entire assessment and therefore the refund claim filed by the assessee after the Final Order was passed by this Tribunal holding that no tax was liable to be paid, has to be considered as one arising as a result of the Tribunal order and therefore the time limit cannot be accounted from the date of payment of tax. - Decided against Revenue.

Utilization of excess CENVAT Credit - appellant did not maintain separate accounts - Input services - Business Auxiliary Service - Held that:- cap of 20% is applicable on the service tax payable and not on the service tax credit actually availed. What is restricted is only utilisation of the credit and not taking the credit per se; the credit taken could be carried forward. When the cap was removed on 01/04/2008, the appellant was eligible to utilise the credit also. In the present case what is involved is the utilisation of credit in excess of 20% of the tax payable during the impugned period which was permitted. Therefore, utilising the credit in excess of the limit would attract only interest liability. The entire service tax itself cannot be denied to the appellant.

As no lapsing provision was incorporated and that the existing Rule 6(3) of the CENVAT Credit Rules does not explicitly bar the utilization of the accumulated credit, the department should not deny the utilization of such accumulated CENVAT credit by the taxpayer after 01/04/2008. Further, it must be kept in mind that taking of credit and its utilization is a substantive right of a taxpayer under value added taxation scheme. Therefore, in the absence of a clear legal prohibition, this right cannot be denied. - In view of the clarification given by the Board, recovery of the CENVAT credit wrongly taken cannot be sustained. What can be demanded is only interest on the wrongly availed credit from the date of utilisation of credit till 01/04/2008 when the assessee became entitled for the credit. Therefore, the adjudicating authority has to re-examine the matter in the light of the CBEC circular dated 21/11/2008.

As regards the demand on the airline commission and airline incentive received, the demand has been made under the category of Business Auxiliary Services. These services have been rendered by the appellant to promote the business of the carriers (airlines) and, therefore, the classification under Business Auxiliary Service is prima facie sustainable and on the consideration received, the appellant is liable to discharge service tax liability.

With regard to the CCX fee, here also the demand has been made under Business Auxiliary Service and the service has been rendered to the overseas companies by way of recovering amounts from the customers in India towards freight charges, to deliver documents such as delivery orders to the customers on behalf of the foreign principal and also to remit the amounts so collected to the overseas group company. These activities are clearly covered under Business Auxiliary Service and, therefore, the appellant is liable to discharge service tax liability on the consideration received under the said category. - Matter remanded back - Decided partly in favour of assessee.

Recovery of tax from successor - SCN issued before death but could not be adjudicated during his lifetime - whether an assessment proceeding under the Central Excises and Salt Act, 1944, can continue against the legal representatives/ estate of a sole proprietor/ manufacturer after he is dead - Held that:- On a conjoint reading of these paragraphs this Court found that the machinery provisions contained in the Bombay Sales Tax Act, 1953, were sufficient to reassess a dissolved firm in respect of income that had escaped assessment before its dissolution. A distinction was drawn between an individual who dies and a firm that is dissolved as a device to evade tax. The Court laid great stress on the provision contained in Section 15(1) of the said Act by which the jurisdiction to assess or reassess under Section 15(1) is equated with the original jurisdiction to assess the dealer under Section 14. By this method, the Court found the continuity of the legal personality of the assessee is maintained in order to enable the assessment of turnover which has escaped assessment.

The crucial difference, therefore, between Section 15(1) of the Bombay Sales Tax Act, 1953 and Section 11A of the Central Excises and Salt Act is that Section 11A does not contain any such provision as is contained in Section 15(1) which equates the jurisdiction to assess or reassess with the original jurisdiction to assess the dealer in the very first place. Further, this Court also construed Section 19 of the Bombay Sales Tax Act, 1959 which would throw light on the earlier Bombay Sales Tax Act, 1953, as containing the necessary machinery provisions to assess dissolved firms in respect of escaped turnover pre-dissolution.

A reading of the ratio of the majority decision contained in Murarilal's case [1975 (9) TMI 155 - SUPREME COURT] would lead to the conclusion that the necessary machinery provisions were already contained in the Bombay Sales Tax Act, 1953 which were good enough to bring into the tax net persons who wished to evade taxes by the expedient of dissolving a partnership firm. The fact situation in the present case is entirely different.

In the present case an individual proprietor has died through natural causes and it is nobody's case that he has maneuvered his own death in order to evade excise duty. - Neither of these reasons are reasons which refer to any provision of law. Apart from this, the High Court went into morality and said that the moral principle of unlawful enrichment would also apply and since the law will not permit this, the Act needs to be interpreted accordingly. - appeal must be allowed and the judgment of the High Court of Kerala is, accordingly set aside - Decided in favour of assessee.

Manufacturing activity - Whether the activity of mounting of Water Purification and Filteration System (WPFS) on a base frame carried out by M/s Poonam Spark (P) Ltd. amounts to manufacture or not - Held that:- Filter Housing and Cartridges are imported by PDL through M/s Cuno Asia Pte Ltd, Singapore and UV based Filteration and Purification unit from Rathi Brothers/ IWT Poona. The choice of cartridge depends upon the basis of filteration, the operating conditions and the customer's ability to afford the particular type of cartridge, etc. The appellants undertake the job of assembling all the items received from M/s. Perfect Drug Ltd. on a base plate and thus brings into existence a new and commercially different commodity known as Water Purification & Filteration System.

Finding of fact is arrived at by all the three Authorities that the activity undertaken by the appellant amounts to “manufacture” within the meaning of Section 2(f) of the Central Excise Act, 1944, since the end result of the process or activity resulted in new and different commercial product. We, thus, are of the opinion that on the basis of the aforesaid findings which are concurrent findings of all the Courts below, the correct legal principle has been applied. - No merit found in appeal - Decided against assessee.

Classificsation of Close-Up Whitening - toothpaste or not - Classification under Chapter sub-heading 3306.10 or 3306.90 - Held that:- There is no dispute that most of the ingredients of the product Close-Up Whitening are the same which are used in the manufacture of the other products, namely, Close-Up Red/Blue/ Green, which are treated as toothpaste by the assessee itself. There are, however, additional ingredients used in the manufacture of the product in question, which are accepted by the Revenue also and noticed above. Apart from additional presence of Silicon Agglomerate and Bluer Agglomerate of specified percentage and absence of Tri Chloro 2 hydroxy Diphenyl Ether, there is a presence of uniformity dispersed blue speckles in Close-Up Whitening. There is also additional step of 'addition of silica agglomerates'. In fact, it is this ingredient which felicitates at getting uniformity dispersed speckles. It is on the basis of these additional factors, one has to determine as to whether Close-Up Whitening loses the character of toothpaste and assumes the characteristics of another product, namely, dental cleaner.

There is no evidence on record placed by the Revenue which would reflect that the product in question is known to the consumers as toothpaste. - that Close-Up Whitening is not a toothpaste but a dental cleaner. We are convinced that this finding is perfectly just and proper - Close-Up Whitening dental cleaner is not a 'toothpaste' but other form of dental hygiene and, therefore will have to be classified under sub-heading 3306.90 as a consequence. - Decided against Revenue.

Job Work - Dummy unit - revenue allege that JRE was not an independent job unit but was a dummy of the Respondent created and nurtured with the single motive that cost of manufacture be reduced by bifurcation and the cost of sale promotion, advertisements, after sales services etc. were incurred by the respondent company. - Held that:- Reading of the show cause notices that main reason for taking action against the respondent assessee was that JRE was dummy of BIL. However, after going through the order of the Commissioner as well as the Tribunal, we find that this plea of the appellant has not been accepted as proved. After detailed analysis of the material produced, the aforesaid two authorities have concluded that JRE was an independent establishment.

Moreover, another relevant aspect, which is material for our purposes, is that it has been found that the relationship between the BIL and JRE was on principal to principal basis. In fact, the goods were supplied by the JRE to BIL at the same rates at which within the other companies, namely, Uptron and Dixon Utilities were supplying. Therefore, no benefit was even secured by the BIL on the basis of the alleged relationship. On this aspect the case is squarely covered in favour of the respondent by the judgment of this very Bench in the case of Commissioner of Central Excise, Hyderabad v. M/s. Detergents India Ltd. & Anr. in [2015 (4) TMI 358 - SUPREME COURT]. - Decided against Revenue.

Review of order - Whether on the facts and circumstances of the case, it was a case fit for revision under Section 40 of the Haryana General Sales Tax Act, 1973 or a case fit for reassessment under Section 31 of the said Act - Held that:- Tribunal construed the assessment order in detail and came to a positive finding that the assessment order was passed on account of a mistake of law and that the Assessing Authority had, in fact, considered the entire record and had not brought to tax the sale proceeds on account of the sale of DEPB in view of the legal position as he perceived it to be. We were, in fact, informed that prior to the assessment order, the proceeds for the sale of DEPB were not brought to tax in the case of most of the assessees - Assessing Authority had taken the case into consideration is perverse, unreasonable or totally unsustainable. The Tribunal has taken the relevant facts in this regard into consideration. For instance, as we noted earlier, the assessment order was passed pursuant to the notice issued under Section 28(2) on account of the Assessing Authority not being satisfied with the returned sale version. Pursuant thereto, the appellant produced the account books and other relevant documents. The order expressly states that the same had been "examined in detail and found to be maintained in normal course of business". The issue, therefore, did not escape the Assessing Authority. The balance-sheet, admittedly, was also produced. The balance-sheet had attached to it the trading, profit and loss account for the year ending as on 31.03.2000. There is a specific entry regarding the sales of the DEPB. The balance-sheet was also examined by the Assessing Authority. - appeal, therefore, does not raise a substantial question of law - Revision upheld - Decided against assessee.

Demand of interest and penalty - Assessee paid excess Input Tax Credit - Held that:- while declaring / holding that the appellant is entitled to adjustment of admissible Input Tax Credit towards its output tax liability of the current year under consideration, the learned Tribunal has rightly observed and held that the assessee is liable to pay interest only on the dues rising on assessment after adjusting the admissible Input Tax Credit towards its output tax liability - Decision in the case of State of Gujarat V. Cosmos International Ltd. [2015 (4) TMI 779 - GUJARAT HIGH COURT] followed - The present case is having similar question of law involved, which is already been decided by the Division Bench of this Court. Hence, the appeal is meritless - Decided against Revenue.

Refusal to renew permission for admitting students for the academic year 2015-16 in the MBBS Course - Held that:- From a bare reading of the provision contained in Article 19(1)(g) it is evidently clear that the citizens have been conferred with the right to practice any profession or carry on any occupation, trade or business, but such right is subject to the restriction and imposition of condition as provided under Article 19(6) of the Constitution. - The Court held that imparting education cannot be treated as a trade or business. Trade or business normally connotes an activity carried on with a profit motive. This Court observed that education has never been nor can it be allowed to become commerce in this country. Education has always been treated in this country as religious and charitable activity and making it commercial is opposed to the ethos, tradition and sensibilities of this nation. A citizen of this country may have a right to establish an educational institution but no citizen, person or institution has a right much less of fundamental right to affiliation or recognition.

From reading of Article 32, it is manifest that clause 1(i) of Article 32 guarantees the right to move the Supreme Court for an appropriate writ for the purpose of enforcing the Fundamental Rights included in Part-III of the Constitution. The sole object of Article 32 is the enforcement of Fundamental Rights guaranteed by the Constitution. It follows that no question other than relating to the Fundamental Right will be determined in a proceeding under Article 32 of the Constitution. The difference between Article 32 and 226 of the Constitution is that while an application under Article 32 lies only for the enforcement of Fundamental Rights, the High Court under Article 226 has a wider power to exercise its jurisdiction not only for the enforcement of Fundamental Rights but also ordinary legal right.

Petitioners have challenged the decision of MCI and the Central Government refusing to grant permission or renewal to carry on their courses for the Academic Session 2015-16. The decisions are based on the inspection reports submitted by the teams of MCI. The jurisdiction of MCI or the Central Government to grant or refuse to grant permission has not been challenged. Hence, it is well within the jurisdiction of MCI which is statutory body to take a decision based on the inspection of the college to satisfy itself the compliance of various provisions of the acts, rules and regulations - Court is not supposed to go into finding of facts recorded by the authorities and to come to a different conclusion. Moreover, having regard to the law settled by Constitution Bench of this Court in number of decisions, in our considered opinion, the rights so claimed by the petitioners are not fundamental rights; hence the same cannot be agitated directly before this Court under Article 32 of the constitution - Decided against assessee.