K. Veeraswami, J.
1. This petition is for a rule of mandamus directing the respondent, Union of India, represented by the Ministry of Finance, to issue a recognition that the Central Government is satisfied that the petitioners are engaged in the manufacture of one or more of the articles specified in Part A of the Fifth Schedule to the Income-tax Act, 1961. The petitioners are a public limited company incorporated in 1954 and are said to be engaged during the relevant time in the manufacture of grinding wheels and abrasives, being the industrial machinery specified in Sub-clause (iii) of clause C of Part A of the Fifth Schedule to the Income-tax Act. The petitioners, as they aver, are assessed to income-tax by the First Income-tax Officer, City Circle, for 1960-61 and 1961-62, and in the course of these assessments they claimed that their profits in the manufacture of grinding wheels, were exempt from income-tax under Section 15-C of the Indian Income-tax Act, 1922. This contention, according to the petitioners, were accepted, and exemption granted under that provision. After the coming into force of the new Act with effect from 1st April, 1962,. which would have effect on the petitioners' assessments for 1962-63, the petitioners-claimed that the profits in the manufacture of grinding wheels satisfied the condition prescribed in the Fifth Schedule to the Act and therefore any dividend distributed by petitioners to its corporate shareholders would be exempt from super-tax in the assessments of the corporate shareholders under Clause (iv) of Sub-section (1) of Section 99 of the Income-tax Act, 1961. Under the relevant statutory provisions, a pre-requisite for exemption of such super-tax would be the satisfaction of the Central Government that the petitioners are wholly or mainly engaged in an industry for the manufacture or production of one or more of the articles specified in any of the items in Part A of the Fifth Schedule. They, therefore, made an application on 18th April, 1963 to the Central Board of Revenue for recognition as a company engaged in the manufacture of bonded abrasives, which, we are told, is a comprehensive expression to include grinding wheels and other articles of a similar nature produced by the same process. After prolonged delay and calling for particulars more than once at various levels, the Under-Secretary to the Central Board of Direct Taxes, by a communication dated 4th March, 1964, intimated the petitioners with reference to their application that the Board of Revenue had considered the matter, but it regretted that the request regarding exemption contemplated under the Fifth Schedule read with Section 99(i)(iv) of the Income-tax Act, 1961 could not be acceded to. There was a further communication on 14th May, 1964 from the Secretary to the Central Board of Direct Taxes to the petitioners to the effect that if the other condition in Sub-clause (2) of Rule 1 of the Fifth Schedule was not fulfilled which would disentitle the shareholders to the claim for exemption on that ground, alone, the question of the Central Government satisfying itself about the condition in Sub-clause (1) of the rule did not arise. It is in these circumstances the petitioners have approached this Court for a direction as aforesaid.
2. On the view we take, we think it unnecessary to go into the merits of the petitioners' claim for a certificate from the Central Government. The application of the petitioners for a certificate was made not to the Central Government, but to the Central Board of Revenue as it figured then. Section 99(1)(iv) of the Income-tax Act, 1961, reads;
(1) Super-tax shall not be payable by an assessee in respect of the following amounts which are included in his total income...(iv) if the assessee is a company, any dividend received by it, from an Indian Company, subject to the provisions contained in the Fifth Schedule.
3. Rule 1, Clause (a)(1) in the Fifth Schedule provides that super-tax shall not be payable in respect of any dividend which is assessable for the assessment year commencing on the last day of April, 1962, and for the subsequent assessment years and which is declared by an Indian company formed and registered after 31st March, 1952 and before 1st April, 1967 where the Central Government is satisfied that the Indian company is wholly or mainly engaged in an industry for the manufacture or production of any one or more of the articles specified in any of the items in Part A of this Schedule. In Part A, Section 6-C item (iii) relates to grinding wheels and abrasives. It may be clear from these provisions that the satisfaction contemplated by Rule 1(a)(1) of this Schedule is that of the Central Government. But no application was made to the Central Government for a certificate under that provision. When a power is entrusted by a statute to a named authority and the exercise of it is invoked by a person concerned and there is an improper refusal to exercise the power, then, of course, in such premises, a mandamus may well issue under Article 226 of the Constitution directing the authority to exercise the power. But, for doing it, it is a requisite that the applicant must in the first instance approach the authority with a request to invoke the power, and without that, there would be no occasion for the Court to consider that the authority has refused to exercise or exercised the power improperly, which is vested in it. Admittedly, here, there was no application to the Central Government making such a request.
4. Mr. Venkataraman for the petitioners, however, contended that the Central Board of Revenue which was reconstituted as the Central Board of Direct Taxes under the Central Board of Revenue Act, 1963 is but an arm of the Government and it would be proper to say that it is the Central Government itself. He relies on the fact that the Board is manned by some of the officials who belong to the Ministry of Finance. We have no hesitation in rejecting this contention. The Central Board of Revenue Act itself makes a distinction between the Central Government and the Central Board of Direct Taxes. For instance, Section 3 says that the Board shall, subject to the control of the Central Government, exercise its powers and duties entrusted to it by the Central Government or by or under any law. The Income-tax Act itself clearly indicates the framework of the hierarchy of officers with the Income-tax Officer at the bottom and the Central Board of Revenue and now the Central Board of Direct Taxes at the top. The Fifth Schedule which we referred to clearly mentions the Central Government as the authority to be satisfied in the matter of issuing a certificate and not any other authority. In such circumstances, we are unable to accept the petitioners' contention that the Central Board of Direct Taxes should for the purposes of the Fifth Schedule be considered as the Central Government.
5. It may be that when an application was made under the Schedule to the Central Board of Revenue as it stood then, they could well have transmitted it to the proper authority for disposal, though they might not be obliged to do so. That would have tended to the convenience of everybody and would have saved a lot of time and perhaps needless expenditure and futile effort. - But the point remains that so long as the application was not made to the Central Government, we would not be justified in issuing a rule to the Central Government.
6. From what we have said so far, it is obvious that we have not dealt with the merits on which the Central Government would have to be satisfied. The form in which the prayer is couched in the petition pre-supposes that this Court under Article 226 of the Constitution will itself have the power to direct the Central Government to issue a certificate. Though it is not necessary to consider this point, at this stage, we may indicate that the power of this Court will not extend that far. All that this Court can do is, as we indicated at the outset, where the authority vested with a power, improperly refused to exercise it, to call upon that authority by a rule of mandamus to exercise that power and decide according to the merits. It is represented to us for the petitioners that in view of the considerable lapse of time and the urgency of the matter, any application to the Central Government is likely to be delayed in its disposal. We think it proper, in the circumstances of this case, to suggest that if and when an application is made by the petitioners, the Central Government may dispose it of on its merits within at least two months of its receipt.
7. The petition is dismissed, but in the circumstances with no costs.