ivil Appeal No 2488 of 1989 etc
From the Judgment and Order dated 241
1989 of the Bombay High Court in Appeal No 67 of 1989
G Ramaswamy Additional Solicitor General AM Khan wilkar and AS Bhasme for the Appellant
TR Andhrujina RF Nariman Mrs KK Pradhan R Karanjawala Mrs Manik Karanjawala HS Anand PB Agar wal PG Gokhale RB Hathikhanawala KR Nagaraja RS Hegde section Menon MC Shah Madan Lokur Adur Sanjay Vasant and Mrs Urmila Sirur for the Respondents
Mrs Kitty Kumaramangalam Kailash Vasdev Ms Vijaylax mi and SP Pandey for the Intervener
The Judgment of the Court was delivered by DUTT J
Special leave is granted in all these matters
Heard learned Counsel for the parties
These appeals preferred by the State of Maharashtra involve the question as to the admission in the MBBS Course in the Medical Colleges in the State of Maharashtra
In the city of Bombay there are three Medical Colleges run by the Municipal Corporation of Greater Bombay
Besides the said three Municipal Colleges there is another College in Bom bay namely Grant Medical College which is a Government College run by the Government of Maharashtra
712 Shorn of all details it may be stated that after pro viding for 15 per cent of seats under the All India Quota and the seats which are to be reserved under Article 15 of the Constitution of India the Government of Maharashtra laid down a policy of reservation of 70 per cent of the remaining seats for the local students in the city of Bombay and 30 per cent of seats for the students outside Bombay within the State of Maharashtra
Certain students feeling aggrieved by the said method of filling up of the seats in the MBBS Course in the said Medical Colleges in the city of Bombay moved writ petitions before the Bombay High Court
A learned Single Judge of the High Court took the view that it was not proper on the part of the State Government to first of all fill up the 70 per cent of the seats out of the local Bombay students and thereafter the remaining 30 per cent of seats from amongst the students residing outside Bombay
The learned Single Judge however gave no specific direction as to the admis sion of the writ petitioners but left it to the State Government for the purpose
The State of Maharashtra pre ferred a Letters Patent Appeal to the Division Bench of the High Court
The said appeal was summarily dismissed by the Bench holding that the two points urged by the Assistant Government Pleader appear to be quite frivolous
The writ petitioners also preferred Letters Patent Appeals before the Division Bench
From time to time the Bench passed some orders
The only order which is relevant for the purpose of these appeals is dated February 8 1989
By that order the Division Bench of the High Court directed creation of 5 additional seats in each of the three Municipal Colleges and 4 additional seats in the Government Medical College that is in all 19 additional seats
Certain directions were also given by the said order for admission of students in those additional seats and also the seats under the All India Quota
It has been strenuously urged by Mr G Ramaswamy learned Additional Solicitor General appearing on behalf of the State of Maharashtra that the High Court was not justi fied in directing that the 30 per cent of seats meant for the candidates outside Bombay to be filled in before the 70 per cent of seats are filled in by local candidates
It may be stated at this stage that by virtue of the judgment in the case of Nidamarti Maheshkumar vs State of Maharashtra and others  relating to admission in Medi cal Colleges in Maharashtra the State of Maharashtra laid down the policy of regional reservation of 70 per cent of seats for the region of Bombay and the remaining 30 per cent of seats for the candidates outside Bombay but within the State of Maharashtra
It has already been noticed that the High Court 713 iS Of the view that the 30 per cent of seats should have been filled up first and thereafter 70 per cent of region al seats should have been filled up
We have not been able to understand the reason for this view of the High Court
If 30 per cent of seats are filled up first the candidates who are residing outside Bombay will have to compete with the local Bombay students who are also eligible for admission in the said seats
It may so happen that most of the seats meant for candidates outside Bombay may be filled up by the local Bombay candidates
If however 70 per cent of seats are filled up first the more meritorious Bombay students would be admitted and those who would not be admitted would obviously be candidates obtaining lesser marks and it will not be difficult for the outside candidates to compete with them for the said 30 per cent of seats
The question whether 70 per cent of seats or 30 per cent of seats should be filled up first is a question which should be left to the discretion of the Government
In our opinion this aspect is not within the purview or the jurisdiction of the Court
We do not find any unreasonableness or impropriety in the State Government s decision to fill up 70 per cent of seats first
The High Court was not therefore justified in directing admission on the basis of filling up 30 per cent of the seats first and thereafter 70 per cent of seats and such direction has created some complications in the matter
There is considerable force in the contention of Mr Ramaswamy that the High Court was also not justified in directing creation of additional seats
The additional seats can be created only if the Indian Medical Council approves of such creation
In the instant case the Indian Medical Council has vehemently opposed before us the creation of the additional seats
There is also the question of bearing the cost of creation of additional seats
The High Court in our opinion should not have directed the creation of additional seats
In exceptional circumstances and for ends of justice the Court may direct the creation of one or two seats after giving the Indian Medical Council an opportunity of being heard but surely the Court should not direct the creation of so many additional seats when neither the Government nor the Indian Medical Council consents to such creation
In the circumstances it is difficult to sustain the impugned judgment of the High Court
We are told by the learned Additional Solicitor General that 4 seats in the Grant Medical College in Bombay and 34 seats in the other Medical Colleges outside Bombay under the All India Quota are available for admission
We are also told that there are about 30 candidates who are to be admit ted in these seats
Of these 30 candidates we find 714 that one Sandeep Chaudhary and Miss Chaudhary Seena the applicants in Civil Miscellaneous Petitions Nos
9049 of 1989 and 9050 of 1989 respectively were already admitted in the 2 out of the 4 seats in the Grant Medical College Bombay
They were initially admitted in the Gwalior Medical College but on their representation they were transferred to the Grant Medical College Bombay by the Director Gener al of Health Services in compliance with the guidelines laid down by this Court in its judgment in the case of Amanjit Singh Gill vs Directorate General of Health Services   but in view of the impugned judgment of the High Court they have been thrown out for no fault of theirs
The admission of these two candidates in the Grant Medical College Bombay is restored and will not be disturbed
So far as the remaining 36 seats are concerned 2 seats in the Grant Medical College
Bombay and 34 seats in the Medical Colleges Outside Bombay the admission to these seats shall be made strictly in order of merit
The appellants shall complete the admissions in the said 36 seats within a week from today
The impugned judgments of the High Court are set aside and the appeals are allowed to the extent indicated above
There will be no order as to costs
The writ petitions and all other applications for inter vention are also disposed of as above without any order as to costs
PSS Appeals allowed


Summary:
The respondent assessee was one of the partners In a firm in which the five other partners were his wife mother grand father brother and a stranger
His wife had contrib uted Rs51000 as capital in the firm which amount came out of two gifts made to her by the assessee
in the course of assessment proceedings for the assessment year 1962 63 in respect of the assessee the Income Tax Officer included the profits of the assessee s wife from the firm under section 641iii of the Income Tax Act 1961
Theassessee s appeal was dismissed by the Appellate Assistant Commissioner who observed that the wife would not have become a partner of the firm unless he had contributed capital which was provided by the husband
The Appellate Tribunal while dismissing the second appeal of the assessee found that the admission of the assessee s wife as a partner in the firm was solely on account of her contribution of capital to the firm
It was conceded by the assessee before the Tribunal that the interest received by the assessee s wife on her capital contribution to the firm was includible in the total income of the assessee
The High Court while answering the question referred to it in favour of the assessee took the view that the income arose from the share of profits only because the other partners agreed to take the assessee s wife as partner and she was allowed to contribute to the partnership firm and that the admission of the assessee s wife to the partnership was not in consequence of the gift
Dismissing the Revenue s appeal it was HELD 1 The income may arise directly or indirectly but for application of the provisions of section 641iii of the Income Tax Act 738 1961 there must be a proximate connection between the accru al of the income and the assets transferred by the assessee
741D Commissioner of Income tax West Bengal 111 vs Prem Bhai Parekh followed
2 The mere contribution of the capital by the wife into the firm would not automatically have entitled her to partnership in the firm
The partnership was based on agree ment and it is the event of agreement between the partners that brought the assessee s wife into the firm as partner
742E Commissioner of Income tax Bangalore vs JH Gotla  Commissioner of Income tax Assam Tripura and Manipur vs Jwalaprasad Agarwala  VD Dhanwatey vs Commissioner of Income tax Madhya Pradesh Nagpur and Bhandara  Smt
Mohini Thapar vs Commissioner of Income tax Central Calcutta  Potti Veerayya Sresty vs Commissioner of Income tax AP distinguished