ivil Appeal No 2675 of 1987
From the Judgment and Order dated 1831987 of the Central Administrative Tribunal Allahabad in Registration TA No 999 of 1986
A Subba Rao and CV Rao for the Appellants
Harish N Salve BS Chauhan Sushil Kumar Jain Ms Gitanjali Mohan and BP Singh for the Respondents
The Judgment of the Court was delivered by SAWANT J
Respondents 1 and 2 in this Appeal Dr Tripa thi and Shri Sinha hereinafter referred to as the respond ents were recruited directly to the posts of Income Tax Officers Class I
They had made a grievance before the Central Administrative Tribunal Allahabad that they were not appointed to the next higher post of Assistant Commis sioner Income Tax according to their turn in the seniority list prepared as per the directions given by this Court in the cases of Bishan Sarup Gupta etc
vs Union of India  Ors etc
  and Union of India etc
vs Majji Jangamayya etc  As a result their seniority as Assistant Commissioners was adversely affected and it required correction
This grievance found favour with the Tribunal which by its impugned decision of 183
1987 quashed the seniority list of Assistant Commis sioners and Commissioners of Income Tax and directed the appellants herein namely the Central Board of Direct Taxes and the Union of India to redetermine their seniority in the list of Asstt
Commissioners vis avis the seniority of respondents 3 to 20 who are also direct recruits and other concerned officers in the light of the directions and princi 338 ples laid down by this Court in the case of Union of India etc
vs Majji Jangamayya etc
supra
The dispute with regard to the seniority between the direct recruits and the promotees in the Income Tax Depart ment was set at rest by a Constitution Bench of this Court when it delivered its decision on 1641974 in BS Gupta case supra which is also known as the lind BS Gupta case
By that decision this Court accepted as correct the seniority list of Income Tax Officers which was filed before it on February 15 1973 having been prepared in accordance with the directions given in the judgment dated August 16 1972 in what is known as the 1st BS Gupta case reported in 1975 Supp
SCR 491
On the basis of this seniority list the Departmental Promotion Committee hereinafter referred to as the Committee prepared a selection list in July 1974 for promotion of Income Tax Officers Class I to the posts of Assistant Commissioners
There were 112 vacancies and the Government sent to the Committee 336 names in order of seniority for consideration of the field of choice
The Committee followed the instructions given for the purpose in the Government Memorandum of 1957 and found 276 Officers fit for the area of choice assessed the merits of 145 persons in order of seniority found one officer outstanding 114 very good and 7 Scheduled Caste Scheduled Tribes Officers good
This selection was challenged in various High Courts
Two of the High Courts allowed the petitions in favour of the challenging petitioners and the other High Courts gave interim orders staying the operation of the selection list
At that stage the Union of India preferred appeals to this Court
This Court allowed the appeals and upheld the selec tion list vide Union of India etc
vs Majji Jangamayya case supra decided on 5111976
While doing so this Court explained the observations made in the 1st BS Gupta case supra at page 506 thereof which were relied upon by the respondent Officers in that case
These observations were as follows After the fresh seniority list is made in accord ance with the above directions it will be open to any direct recruit or promotee to point out to the department that in the selections made to the post of Assistant Commis sioner from 1962 onwards he being otherwise eligible was entitled on account of the new seniority given to him to be considered for promotion to the post of Assistant Commis sioner
The department may have to consider his case for promotion on his record as on the date when he ought to have been considered for selection but not so considered
If 339 he is selected his position will be adjusted in the cadre of the Assistant Commissioners without affecting the promo tee Assistant Commissioners who had been confirmed prior to 2221967 the date on which the Jaisinghani s case was disposed of by this Court Emphasis supplied While explaining these observations this Court observed as follows The observations   are that if as a result of the fresh seniority list it is found that any officer was eligible for promotion to the post of Assistant Commissioner on account of his place in the new seniority list the department might have to consider his case for promotion on his record as on the date when he ought to have been consid ered and if he would be selected his position will be ad justed in the seniority list of Assistant Commissioners
The object is to see that the position of such a person is not affected in the seniority list of Assistant Commissioners because he is actually promoted later pursuant to the new seniority list although according to the new seniority list itself he should have been promoted earlier
The observa tions do not mean that although the Committee can meet for the selection of officers for promotion to the post of Assistant Commissioner only after the seniority list is approved by this Court the selection would be deemed to be made at the time when a vacancy in the post of Assistant Commissioner occurred and the eligibility of officers for selection will be determined by such deemed date of selec tion
No employee has any right to have a vacancy in the higher post filled as soon as the vacancy occurs
Government has the right to keep the vacancy untilled as long as it chooses
In the present case such a position does not arise because of the controversy between two groups of officers for these years
The seniority list which is the basis for the field of choice for promotion to the post of Assistant Commissioner was approved by this Court on 16 April 1974
Promotions to the post of Assistant Commissioners are on the basis of the selection list prepared by the Committee and are to be made prospectively and not retrospectively Emphasis ours 340 The contention raised by the respondents Dr Tripathi  Shri Sinha in the present appeal and which as stated above is accepted by the Tribunal was that in view of the said observations in 1st BS Gupta case supra as explained in Majji Jangamayya case supra while selecting the Income Tax Officers to the post of Assistant Commissioners the Commit tee was required to consider the cases of the Income Tax Officer falling within the zone with reference to their records on the date the Committee met for selection
They were not to be selected with reference to their records relevant to the year for which their selection was to be made
Since the Committee followed the latter course it had according to the petitioners violated the directions of this Court given in the case of 1st BS Gupta supra as explained in the case of Majji Jangamayya supra
Unfortu nately the Tribunal fell for this contention little realis ing that it was the first course canvassed by the contesting respondents and not the latter which would have been con trary to the directions of this Court in both the 1st BS Gupta case supra as well as Majji Jangamayya case supra
As is abundantly clear from the relevant observations repro duced above what was desired by this Court in both these cases was that if according to the new seniority list there were cases of officers who were entitled to be considered for promotion much before they were considered on the basis of the old seniority list the Committee should Look into such cases and should adjust the promotions given right from the year 1962 onwards by considering the cases of such unjustly superseded officers
Hence the Committee was re quired to consider the vacancies in the posts of Asstt
Commissioners year wise from 1962 onwards and if the super seded officers were found fit for such promotion they were to be given seniority as Asstt
Commissioners from the year in which they would have been promoted
It goes without saying that while considering the promotions in the earlier years the Committee had to consider the record of the officers relevant to those years
The Committee could not have taken into consideration the record of future years for promotion in the earlier years
This is also the import of the observations of this Court emphasised by us above
The Committee did exactly that as is clear from what is stated in paragraphs 12 to 18 of the counter filed on behalf of the appellants in the proceedings before the Tribunal
There it is pointed out specifically with reference to the contesting respondents Dr Tripathi and Shri Sinha that the Committee which met from 1977 to 1979 to adjust the promotions as directed by this Court  considered in 1978 the case of Dr Tripathi with respect to his claim which arose in September 1968 February 1969 and September 1969
He was not selected to the post for the vacancies in September 1968 and February 341 1969 on the basis of comparative merit
However he was selected for one of the vacancies in September 1969 and was given deemed promotion with reference to that date
So also the case of respondent Shri Sinha was considered for the vacancies in September 1968 February 1969 and September 1969
He was not selected for the vacancies in September 1968 and February 1969 but was selected for one of the vacancies in September 1969
He was given the deemed date of promotion from that date
There is no dispute that the seniority of both the respondents as Asstt
Commissioners has been fixed with reference to the said dates of their deemed promotion
Mr Salve the leaned counsel appearing for both the contesting respondents however urged two contentions
His first and the main contention was that the claims of the said respondents should have been considered on the basis of their records either on the date the new seniority list was prepared ie February 2 1973 as
approved in the lind Gupta case decided on April 16 1974 or on the date the Committee met in 1978 to consider their claims for the promotional posts
He contended that this was the direction given by this Court in the 1st Gupta case supra and in Majji Jangamayya case supra
We have already quoted above the directions given in both the said cases
It will be obvious from the said directions that the course suggested by Shri Salve if adopted by the Committee would have been in clear violation of the said directions
On the other hand the Committee had strictly and correctly abided by the said directions
The second contention urged by Shri Salve was that the selection was not made according to the instructions given in the Government Memorandum of 1957
According to him it is the merit cum seniority and not seniority cum merit formula which should have been followed while making the promotions
We have no record before us to find out what exactly were the comparative merits of the contesting re spondents as against the other candidates
The respondents in their counter affidavit have stated in so many words that the comparative merits of the respondents were considered vis a vis the other candidates for each of the occasions
They were not selected for the vacancies of two earlier occasions and were selected on the third occasion on the basis of the comparative merits
We also cannot overlook the fact that before the Tribunal the contesting respondents neither advanced any such contention nor requested for the production of the records
In fact their case before the Tribunal did not centre rounds this point at all
Even so since the records were brought by the appellants in this Court we had asked Shri Salve to look into them and inform us 342 whether his grievance that the merits of his clients were not given due weight by the Committee had any substance
No such material was furnished to us
The result is the appeal is allowed and the impugned decision of the Tribunal is set aside
In the circumstances there will be no order as to costs
The interim application and the contempt petitions respectively were filed by the contesting respondents for seeking directions to the appellants to appoint them provi sionally as Chief Commissioners of Income Tax and for taking action for the alleged breach of the orders of this Court for not considering their claims to the said posts according to seniority
In the view we have taken they have to be dismissed
We also understand from the appellants that the contesting respondents have since been appointed as Chief Commissioners according to their seniority as determined by the department and approved by us as above
We have been told by appellants  counsel that the reversal of the Tribu nal s decision no longer affects the promotion granted to them
NPV Appeal al lowed


Summary:
The appellant a company resident in British India had a cotton mill
The cloth manufactured in the mill was sold in British India as well as native States
For the assess ment years 194546 194647 and 1947 48 the company was assessed under Section 142c of the Income Tax Act 1922 in respect of certain sums remitted to British India from native States in addition to the assessment under Section 423 deeming 13rd of the profit from the sales effected in native States as having accrued from the manufacturing part of business in British India
The assessee s contention that 13rd of income having been assessed under Section 423 as income deemed to have accrued in British India no further assessment should be made under Section 142c was rejected by the Income Tax Officer the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal
The Tribunal also rejected the assessee s additional contention that if the remittances made to British India in any year exceeded the amount taxed under Section 423 then it was only so much of the excess which could be taxed under Section 142c
However it reduced the additions made by the Income Tax Officer and affirmed by the appellate authority by 13rd of such remit tances
On a reference made under Section 661 the High Court confirmed the Tribunal s decision
In the appeal before this Court on behalf of the appel lantassessee R was contended that where there was a mixed fund as in the instant case consisting partly of taxed and partly of untaxed monies any remittance made should he deemed to have been paid out of that 294 part of the money which had suffered tax and that it was the right of the tax payer to attribute the payment to the taxed money so as to obtain the benefit allowed by the law
Dismissing the appeals this Court HELD 11 If there were two funds at the disposal of the assessee one upon which tax had been already levied and another which was liable to be brought to tax a presump tion in the absence of evidence to the contrary might arise that the remittance made by the assessee in the course of its business was made out of the fund that was already taxed and not out of the fund that remained to be taxed
297F Meyyappa Chettiar vs The Commissioner of Income Tax  45 referred to 12 The tax payer is given the right of attribution in the way most favourable to himself
In the absence of evi dence to the contrary it is presumed that payments are made out of income
This abstract principle of attribution is applicable in certain circumstances
Whether it is applica ble in a particular case depends upon the facts of that case and the provisions of the statute
It can be adopted only to the extent that it is consistent with the law and facts
298E F Paton As Penton s Trustee vs Commissioners of Inland Revenue 21 Tax Cases 626 and The Cape Brandy Syndicate vs The Commissioners of Inland Revenue 12 Tax Cases 359 366 referred to
In the instant case on the facts found the assessee did not have two funds but only one fund composed of taxed and non taxed amounts
As one third of this amount had already been taxed under section 423 of the Act 13rd of the remittances to British India in a particular year was held to be exempted from levy
The Tribunal having excluded 13rd of the remittances to British India from taxation during a particular year the High Court was justified in refusing to grant any further relief to the assessee
297G 299B