VAIBHAVI DISCRETIONARY FAMILY TRUST, MUMBAI V. ITO 12(2)(1), MUMBAI

ITA 2900/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3994 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: F
• Assessment Year: 1986-1987
• Appeal Filed On: 28-04-2014
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: RAJENDRA D SHAH
• Keywords: Revision of order
• Section: 143(3); 263; 154

Judgement Text

, , F, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER S.NO. ITANO. & A.Y. APPELLANT RESPONDENT PAN ASSESSMENT YEAR 1986-87 1 2900/MUM/2014 VAIBHAVI DISCRETIONARY FAMILY TRUST, C/O SEVANTILAL N. SHAH & CO. 28, DALAMAL CHAMBERS, 2 ND FLOOR, 17, NEW MARINE LINES MUMBAI-400020 ITO 12(2)(1), MUMBAI AAATV4225C 2. 2901/MUM/2014 VAIRAGI DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV6927D 3 2902/MUM/2014 VISHODHANA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4224D 4 2903/MUM/2014 VIRAG DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAAAV1906F 5 2904/MUM/2014 VAKSHA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAAAV1905G 6 2905/MUM/2014 VIHARIKA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4223E 7 2906/MUM/2014 VISMRUTI DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4222F 8 2907/MUM/2014 VINODA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV6928N 9 2908/MUM/2014 VANDITA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4209L 10 2909/MUM/2014 VEDNA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4208M 11 2910/MUM/2014 VAISHAKHI DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV6926C 12 2911/MUM/2014 VIGITA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4207E 13 2912/MUM/2014 VILOMA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4228R 14 2913/MUM/2014 VICHALA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATV4227A 15 2914/MUM/2014 UBHAYA DISCRETIONARY ITO 12(2)(1), AAATU1127E VAIBHAVI & OTHERS 2 FAMILY TRUST MUMBAI 16 2915/MUM/2014 UTTAR DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1126F 17 2916/MUM/2014 UDYAM DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU2002L 18 2917/MUM/2014 UTTAM DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU2001K 19 2918/MUM/2014 UMESH DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1132D 20 2919/MUM/2014 UDAYAN DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1125G 21 2920/MUM/2014 UNNAT DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1124H 22 2921/MUM/2014 UTAKAL DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1123A 23 2922/MUM/2014 URVESH DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1122B 24 2923/MUM/2014 UPENDRA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI AAATU1121C / ASSESSEE BY SHRI RAJENDRA D. SHAH (AR) / REVENUE BY SHRI JEETENDRA KUMAR (DR) ! / DATE OF HEARING : 06/01/2016 ! / DATE OF ORDER: 12/02/2016 / O R D E R PER BENCH: ALL ABOVE APPEALS PERTAINING TO ASSESSMENT YEAR 198 6-87 HAS BEEN FILED BY THE ASSESSEE AGAINST THE CONSOLID ATED ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS)-23 MUMBAI {(IN SHORT CIT(A)}, DATED 12.02.2014, GROU NDS OF APPEAL IN ALL THESE APPEAL ARE IDENTICAL AND READ AS UNDER: 1.IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN THE POINTS OF LAW AND FACTS. 2.IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN VAIBHAVI & OTHERS 3 HOLDING THAT APPELLANT IS NOT ENTITLED TO INTEREST ON REFUND OF RS. 1,360/-. 3.IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ER RED IN HOLDING THAT APPELLANT IS NOT ELIGIBLE FOR INTEREST ON INTEREST . 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI RAJENDRA D. SHAH, AUTHORISED REPRESENTATIVE (A R) ON BEHALF OF THE ASSESSEE AND BY SHRI JEETENDRA KUMAR, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE R EVENUE. ITA NO.2900/MUM/2014 IN THE CASE OF VAIBHAVI DISCRETIONARY FAMILY TRUST MUMBAI: 3. WITH CONSENT OF THE PARTIES THIS APPEAL WAS TAKEN AS A LEAD CASE. 3.1. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A BENEFICI ARY OF K. KACHRADAS PATEL SPECIFIC FAMILY TRUST DERIVING @ 0.5% IMMEDIATE BENEFICIARY, AS PER SCHEDULE-I ATTACHED T O AND FORMING PART OF THE TRUST DEED OF THE SAID TRUST. T HE ASSESSEE FILED RETURN OF INCOME FOR ACCOUNTING YEAR 1984- 85, CORRESPONDING TO ASST. YEAR 1986-87, DECLARING BENEFICIARY SHARE AND INTEREST INCOME FROM THE SAID TRUST. LD. FIRST INCOME-TAX OFFICER A-1, WARD MUMBAI VIDE ASSE SSMENT ORDER DATED 30-03-87 U/S.143(3) OF I.T. ACT MADE PR OTECTIVE ASSESSMENT OF THE SAID INCOME. VAIBHAVI & OTHERS 4 SUBSTANTIVE ASSESSMENT OF INCOME WAS MADE IN THE CA SE OF K. KACHRADAS PATEL SPECIFIC FAMILY TRUST. THE ISSUE OF PROTECTIVE AND SUBSTANTIVE ASSESSMENT WAS CARRIED O UT BEFORE FURTHER APPELLATE AUTHORITIES. HOWEVER, K. KACHRADAS PATEL SPECIFIC FAMILY TRUST DECLARED SAID INCOME, IN ITS CASE, UNDER K.V.S.S. A ND PAID DUE TAXES THEREON. THE CERTIFICATE UNDER K.V.S.S. W AS ISSUED. THE LD. ASSESSING OFFICER, VIDE HIS ORDER U /S 155(2) ,DT. 20-09-2000, DELETED THE INCOME, WHICH WAS PROTECTIV ELY ASSESSED IN THE CASE OF THE ASSESSEE SINCE SUBSTANT IVE ASSESSMENT THEREOF MADE IN THE CASE OF K. KACHRADAS PATEL SPECIFIC FAMILY TRUST. THE ID. ASSESSING OFFICER GRANTED REFUND OF TAXES A S UNDER: TOTAL TAXES PAID RS. 500/- LESS: REFUND OF A.Y. 84-85 ADJUSTED RS. 860/- R.O. ISSUED RS. 1,360/- THE APPLICATION U/S. 154 WAS MADE TO LD. ASSESSING OFFICER, INTER-ALIA REQUESTING AS UNDER: A) INTEREST ON REFUND OF RS. 1,360 TILL 28-11-2000. B) COMPENSATORY INTEREST. THE ID. ASSESSING OFFICER, VIDE ORDER U/S.154/155 O F I.T. ACT DATED 05-12-12 REJECTED THE CLAIM OF THE ASSESSEE L D. CIT(A)- 23, MUMBAI VIDE HIS ORDER DATED 17.06.2014 CONFIRME D THE ORDER OF THE ASSESSING OFFICER. 3.2. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFO RE THE TRIBUNAL. DURING THE COURSE OF HEARING BOTH THE PAR TIES VAIBHAVI & OTHERS 5 SUBMITTED THAT IDENTICAL ISSUES HAVE BEEN DELIBERAT E UPON DECIDED BY THE TRIBUNAL IN THE OTHER GROUP CASE IN FAVOUR OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT ALL THE AFORESAID APPEALS CONTAIN IDENTICAL FACTS AND ISSUES. IN VIEW OF THESE SUBMISSIONS AND FACTS, THESE APPEALS WERE HEARD AS COVERED WITH THE JUDGMENT OF THE TRIBUNAL IN OTHER GROUP CA SES DATED 24.11.2015 RANCHOD DISCRETIONARY FAMILY TRUST AND O THERS IN ITA NO.4712-4722/MUM/2014. THE RELEVANT PORTION OF THE AFORESAID ORDER OF THE TRIBUNAL IS REPRODUCED BELOW : 3. DURING THE COURSE OF HEARING BEFORE US, AUTHORISED REPRESENTATIVE(AR)AND THE DEPARTMENTAL REPRESENTATIVE(DR)AGREED THAT IDENTICAL ISSUE HAS B EEN DELIBERATED UPON AND DECIDED BY THE TRIBUNAL IN OTH ER GROUP CASES, FOLLOWING THE ORDER OF THE SPECIAL BEN CH, THAT THE HONBLE GUJARAT HIGH COURT HAD UPHELD THE ORDER OF THE SPECIAL BENCH ON 26.06.2008 IN IT APPEAL NOS.1514 T O 1795OF 2006(PUNITABEN K. PATEL OSFDT AND 284 OTHER CASES),NOS. 573-618 AND1216-1233OF 2007 (MANJULABEN PRAMODBHAI & ORS)AND NOS.182,204 OF 2002, NO.27-30 OF 2004(JANAK PRAMODBHAI PATEL & ORS). DISMISSING THE APPEALS FILED BY THE REVENUE, THE HONBLE HIGH COUR T OBSERVED AS UNDER : AS REGARDS GRANT OF INTEREST ON REFUND, WE FIND TH AT TRIBUNAL WAS JUSTIFIED IN HOLDING THAT REFUND SHOUL D BE GRANTED WITH INTEREST. WE ARE IN FULL AGREEMENT WIT H THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL. WE REPE AT THAT REVENUE SHOULD NOT DRAG THE RESPONDENTS TO UNNECESS ARY AVOIDABLE LITIGATION WE FIND THAT WHILE DECIDING 31 APPEALS FILED BY THE OTHER TRUSTS, ON RS.25.3.2015,THE F BENCH OF THE TRIBUN AL HAD HELD AS UNDER :- 3.3.IT IS UNDISPUTED FACT THAT IN VIEW OF THE SUBST ANTIAL ASSESSABILITY OF THE INCOME IN THE HANDS OF THE MAI N TRUST NO INCOME IS ASSESSABLE IN THE HANDS OF THESE ASSES SEES. THUS, IT IS THE CASE OF THE ASSESSEE THAT WHATEVER TAX IS REFUNDED TO THE ASSESSEE, THE ASSESSEE IS ENTITLED TO GET VAIBHAVI & OTHERS 6 INTEREST ON THE SAID REFUND UNDER THE PROVISIONS OF SECTION 244(1A) OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT ON SIMILAR FACTS AND CIRCUMSTANCES IN THE CASES OF OTH ER BENEFICIARIES THERE IS DECISION OF SPECIAL BENCH, W HICH IS DATED 7/7/2006, COPY OF WHICH IS FILED AT PAGES 33 TO 63 OF THE PAPER BOOK AND IT WAS DECIDED BY THE SPECIAL BENCH THAT THE BENEFICIARIES ARE ENTITLED TO GET THE INTE REST. THE SPECIAL BENCH WHILE DECIDING THIS ISSUE IN FAVOUR O F THE ASSESSEE HAS CONSIDERED THE PROVISIONS OF KVSS 1998 AND AFTER CONSIDERING THOSE PROVISIONS IT WAS HELD THAT INTEREST WAS RIGHTLY GRANTED TO THE ASSESSEE. IN THE CASES B EFORE SPECIAL BENCH INITIALLY SUCH INTEREST WAS GRANTED B Y THE AO WHICH WAS WITHDRAWN BY THE CIT U/S.263 AND IT WA S HELD THAT INTEREST WAS RIGHTLY GRANTED BY THE AO. R EFERENCE WAS MADE TO THE FOLLOWING OBSERVATIONS OF THE SPECI AL BENCH. 27.WE HEARD BOTH SIDES IN DETAIL AND CONSIDERED THE MATTER IN THE LIGHT OF THE EARLIER ORDERS OF THE DI FFERENT BENCHES OF THE TRIBUNAL ON THE SUBJECT AND THE PLET HORA OF MATERIALS PLACED BEFORE US ALONG WITH ASSESSMENT, A PPEAL AND REVISION ORDERS. 28.THE FIRST ISSUE THAT CAME UP FOR CONSIDERATION I S WHETHER THE DISPUTE REGARDING THE ISSUE INVOLVED IN THESE A PPEALS WERE CONTINUED TO EXIST AT THAT POINT, OF TIME. WE FIND THAT THIS QUESTION IS QUITE ACADEMIC. THE MAIN TRUSTS HA VE SOUGHT SETTLEMENT OF THEIR SUBSTANTIVE ASSESSMENTS UNDER KVSS WHICH HAVE BEEN ACCEPTED AND ACTED UPON BY THE DEPARTMENT. THAT ITSELF SHOWED THAT THE CONTROVERSY CONTINUED AND EXISTED AT THAT POINT OF TIME AND THE RE IS NO DOUBT THAT THE ISSUE WAS PENDING BEFORE THE HIGH CO URT IN REFERENCE JURISDICTION. THEREFORE, TO MAKE THE MATTER CLEAR ,WE STATE THAT THE COMMISS IONER OF INCOME-TAX WAS NOT CORRECT IN HOLDING THAT SUCH A CONTROVERSY DID NOT EXIST. 29.WE FURTHER FIND THAT THE ANSWER TO THE CONTROVER SY CROPPED UP IN THESE CASES IS AVAILABLE IN THE RELEV ANT INSTRUCTIONS ISSUED BY THE CBDJ IN THE CONTEXT OF K AR VIVAD SAMADHAN SCHEME, 1998.WE HAVE ALREADY SEEN TH E RELEVANT QUESTION AND ANSWER TO THE QUESTION. THE C BDT HAS STATED IN UNEQUIVOCAL TERMS THAT DECLARATIONS A RE TO BE MADE IN RESPECT OF SUBSTANTIVE ASSESSMENTS. THE BOA RD HAS CLARIFIED THAT THE PROTECTIVE DEMAND IS NOT SUB JECT TO VAIBHAVI & OTHERS 7 RECOVERY UNLESS IT IS FINALLY UPHELD. THE BOARD HAS FURTHER EXPLAINED THAT ONCE THE DECLARATION IN A SUBSTANTIV E CASE OR YEAR IS ACCEPTED, THE TAX ARREAR IN PROTECTIVE C ASE / YEAR WOULD NO LONGER BE VALID AND WILL BE RECTIFIED BY S UITABLE ORDERS IN THE NORMAL COURSE. IN THE PRESENT CASE SUBSTANTIVE ASSESSMENTS HAVE BEEN MADE BY THE DEPARTMENT IN THE HANDS OF MAIN TRUSTS. PROTECTIVE ASSESSMENTS HAVE BEEN MADE IN THE CASE OF BENEFICIA L TRUSTS. MAIN TRUSTS HAVE SETTLED THE DISPUTE UNDER KVSS. THEY HAVE PAID THE TAX UNDER KVSS IN RESPECT OF THE ASSESSMENT COMPLETED IN THEIR HANDS ON SUBSTANTIVE BASIS. THEREFORE, IN THE LIGHT OF THE CIRCULAR, THE CORRESPONDING PROTECTIVE ASSESSMENTS MADE IN THE HA NDS OF BENEFICIAL TRUSTS WOULD FADE AWAY AND THE DEMAND RAISED IN THOSE PROTECTIVE ASSESSMENT WOULD NO LONG ER BE VALID. WHEN THE ASSESSMENT IS NOT SUBSISTING AND TH E DEMAND IS NOT VALID, THE AMOUNT PAID BY THE ASSESSE E ALONG WITH THE RETURN SUBJECT TO PROTECTIVE ASSESSM ENT BECOMES REFUNDABLE TO THE ASSESSEE. THEREFORE, WE A RE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER H AS RIGHTLY ACCEPTED THE PRAYERS OF THE ASSESSEES AND P ASSED APPROPRIATE ORDERS EXCLUDING THE INCOMES WHICH HAVE ALREADY BEEN CONSIDERED IN THE HANDS OF THE MAIN TR USTS UNDER KVSS. THEREFORE, OBVIOUSLY, THE ASSESSING OFF ICER IS JUSTIFIED IN FOLLOWING THE CONSEQUENTIAL PROCEDURE AND MAKING REFUND TO THE ASSESSEES. 30. ONE OF THE BASIC PRINCIPLES OF TAXATION IS THAT THE INCOME SHALL NOT BE TAXED TWICE. IN THE PRESENT CAS E, THE INCOME UNDER DISPUTE IS THE SAME CONSIDERED IN THE HANDS OF THE MAIN TRUSTS AND ALSO CONSIDERED IN THE HANDS OF THE BENEFICIAL TRUSTS. KAR VIVAD SAMADHAN SCHEME, 1998 WAS INTRODUCED BY GOVERNMENT OF INDIA TO SETTLE THE PEN DING LITIGATIONS AT DIFFERENT LEVELS AND COLLECT THE TAX ONCE FOR ALL AND REACH FINALITIES IN THE MATTERS CONNECTED THERE TO. EVEN THOUGH KVSS WAS A SPECIAL SCHEME, THE KVSS DID NOT PROPOSE TO TAX ANY INCOME TWICE. WHETHER UNDER THE REGULAR PROVISIONS OF THE INCOME-TAX ACT OR UNDER T HE SCHEME OF KVSS WHAT IS TO BE ASSESSED AND SUBJECTED TO TAX IS THE REAL INCOME ONCE FOR ALL. KVSS DOES NOT CREATE ANY ARTIFICIALITY. A CASE OF DOUBLE TAXATION OF THE SAME INCOME CANNOT BE ENDORSED UNDER THE KVSS. IN OTHER VAIBHAVI & OTHERS 8 WORDS, THE KAR VIVAD SAMADHAN SCHEME, 1998 DOES NOT EMPOWER THE INCOME-TAX DEPARTMENT TO TAX THE SAME INCOME MORE THAN ONCE. THIS MUST BE MADE VERY CLEAR . 31.WHAT ARE THE SIMPLE FACTS AVAILABLE IN THESE CAS ES? THE INCOMES OF THE MAIN TRUST HAVE BEEN DISTRIBUTED TO THE BENEFICIARY TRUSTS. THE BENEFICIARY TRUSTS HAVE FIL ED RETURNS IN THEIR INDIVIDUAL HANDS. THIS POSITION WAS NOT AC CEPTED BY THE REVENUE. THEREFORE, SUBSTANTIVE ASSESSMENTS HAVE BEEN MADE IN THE HANDS OF MAIN TRUSTS. IN ABUNDANT PRECAUTION PROTECTIVE ASSESSMENTS HAVE BEEN MADE IN THE HANDS OF THE RESPECTIVE BENEFICIARY TRUSTS. SUPPOSE THE PROPOSITION MADE OUT BY THE DEPARTMENT WAS ACCEPTAB LE TO THE ASSESSEE AND THE SUBSTANTIVE ASSESSMENTS MADE I N THE HANDS OF THE MAIN TRUSTS HAVE BEEN ACCEPTED BY THE ASSESSEE, WHAT WOULD BE THE POSITION OF THE CORRESP ONDING PROTECTIVE ASSESSMENTS MADE IN THE HANDS OF THE BENEFICIARY TRUSTS? THE PROTECTIVE ASSESSMENTS WOUL D HAVE BECOME INVALID AS A RESULT OF WHICH THE REVENUE WOU LD REFUND THE AMOUNT OF TAX IF ANY PAID BY THE BENEFIC IARY TRUSTS WHILE FILING THE RETURNS OF INCOME IN THEIR INDIVIDUAL CAPACITIES. THERE CANNOT BE ANY DISPUTE ON THIS PROPOSITION. IS IT POSSIBLE TO HOLD THAT THE ABOVE POSITION WOULD BE DISTURBED ONLY BECAUSE OF THE INTERVENTION OF KVSS. THE MAIN TRUSTS HAVE SETTLED THEIR SUBSTANTIV E ASSESSMENTS UNDER KVSS WHICH FOR ALL PRACTICAL PURP OSES IS EQUIVALENT TO FINALLY SETTLING THE SUBSTANTIVE ASSESSMENTS IN THEIR HANDS. THE FINAL OUTCOME OF TH E WHOLE PROCESS IS NOT DIFFERENT FROM THE SUBSTANTIVE ASSESSMENTS HAVING BEEN ACCEPTED BY THE ASSESSEES A S SUCH OR HAVING BEEN SETTLED UNDER AN AVAILABLE SCHEME KNOWN AS KAR VIVAD SAMADHAN SCHEME, 1995. IN EITHER CASE THE PROTECTIV E ASSESSMENTS BECOME INVALID WHEREBY NO DEMAND CAN BE ENFORCED AGAINST THOSE PROTECTIVE ASSESSMENTS. THE CONSEQUENCE IS THAT IF THE ASSESSEES HAVE PAID ANY AMOUNT OF TAX ALONG WITH THEIR RETURNS CONSIDERED F OR PROTECTIVE ASSESSMENTS, SUCH TAXES HAVE TO BE REFUN DED TO THEM. 32.WE DO NOT FIND MUCH FORCE ON THE RELIANCE PLACED BY THE LEARNED STANDING COUNSEL ON THE DECISION OF THE GUJ ARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMI CAL VAIBHAVI & OTHERS 9 INDUSTRIES VS. ITO 194 ITR 659. IN THAT CASE THERE WAS NO ASSESSMENT AT ALL AND THE QUESTION OF REFUND WAS CONSIDERED IN THAT PERSPECTIVE WHICH IS QUITE DIFFE RENT FROM THE PRESENT CASE. THE INCOME INVOLVED IN THE SUBSTA NTIVE ASSESSMENT AS WELL AS IN THE PROTECTIVE ASSESSMENTS ARE ONE AND THE SAME. THE INCOME HAS BEEN ASSESSED SUBSTANTIVELY IN THE HANDS OF THE MAIN TRUSTS AND T HE DEMAND SUBSEQUENTLY SETTLED UNDER KVSS. IT IS QUITE UNNECESSARY TO REPEAT THAT THE INCOME HAS ALREADY B EEN ASSESSED IN THE HANDS OF THE MAIN TRUSTS. THEREFORE , NOTHING REMAINS THEREAFTER TO BE ASSESSED IN THE HA NDS OF THE BENEFICIARY TRUSTS, AS FAR AS THE INCOME OF MAI N TRUST IS CONCERNED. MOREOVER, A CASE OF ASSESSMENT CAN BE CONTEMPLATED IN THE PRESENT CASES BECAUSE THE STAND TAKEN BY THE ASSESSEES IS THAT THE, INCOME OF THE M AIN TRUSTS HAS TO BE ASSESSED IN THE HANDS OF THE INDIV IDUAL BENEFICIARY TRUSTS. IT IS ON THE BASIS OF THAT PROP OSITION THAT THE RETURNS WERE FILED BY THE BENEFICIARY TRUSTS. W HILE RETURNS WERE FILED BY THE BENEFICIARY TRUSTS IN THE IR INDIVIDUAL CAPACITIES THEY ARE IN FACT OFFERING INC OME FOR TAXATION. SECTION 140A PROVIDES THAT WHEN AN ASSESS EE FILES A RETURN OF INCOME AND WHERE TAX IS DUE AS PE R THE SAID RETURN, THE TAX SHALL BE PAID BY THE ASSESSEE BEFORE FILING THE RETURN OF INCOME AND THE PROOF OF SUCH P AYMENT OF TAX PROOF OF SUCH PAYMENT OF TAX SHALL BE ACCOMP ANIED ALONGWITH THE RETURN OF INCOME. THIS IS CALLED SELF - ASSESSMENT. WHEN AN ASSESSEE FILES A RETURN WITH PO SITIVE INCOME AND REMITS TAX THEREON U/S 140A, IN FACT, AN ASSESSMENT IS BEING CONTEMPLATED EVEN THOUGH IT IS A SELF- ASSESSMENT. LATER ON, WHEN IT IS FOUND THAT THE IN COME COVERED BY THE SAID RETURN IS NOT TAXABLE THE TAX P AID BY THE ASSESSEE IN PURSUANCE OF THAT RETURN HAS TO BE RETURNED BY THE REVENUE. THEREFORE, REFUND OF TAX I S A MUST IN THIS CASE. THE PROPOSITION MADE BY THE CIT AGAINST THE REFUND OF TAX IS NOT PROPER. 33.REGARDING THE GRANT OF INTEREST ALSO, THE POSITI ON IS VERY CLEAR. AS ALREADY OBSERVED IN THE ABOVE PARAGRAPH, THE REFUND OF TAX IN THE PRESENT CASE IS A MANDATE OF L AW. WHEN SUCH A REFUND IS CALLED FOR, INTEREST HAS TO B E PAID AS INTEREST IS COMPENSATORY IN NATURE. IT ALWAYS MO VES WITH THE PRINCIPLE AMOUNT. VAIBHAVI & OTHERS 10 34.THERE IS NO SUBSTANCE IN THE ARGUMENT OF THE REV ENUE THAT THE DELAY N THE REFUND WAS CAUSED BECAUSE OF T HE CONDUCT OF THE ASSESSEES. IN FACT, THE ASSESSEE WAS QUESTIONING THE PROPOSITION OF THE REVENUE TO ASSES S THE INCOME IN THE HANDS OF THE MAIN TRUSTS. THAT IS WHY THE BENEFICIARY TRUSTS HAVE FILED THEIR INDIVIDUAL RETU RNS OF INCOME DISCLOSING THE BENEFITS RECEIVED FROM THE MA IN TRUSTS ALSO. BUT WHEN KVSS WAS PRONOUNCED BY THE GOVERNMENT OF INDIA, IT WAS FOR THE ASSESSEES TO DE CIDE WHETHER TO TAKE BENEFIT OUT OF THAT OR NOT. THEREFO RE, IT IS ONLY WHEN KVSS WAS PROMULGATED, THE ASSESSEE HAD AN OCCASION TO MAKE A MOVE AND SETTLE THE DISPUTE. SO ALSO THE PROCEEDINGS WERE LOCKED UP IN DIFFERENT APPELLA TE FORUMS. THEREFORE, THERE IS NO MERIT IN THE ARGUMEN T OF THE REVENUE THAT THE DELAY WAS CAUSED BY THE CONDUCT OF THE ASSESSEES. 35. THEREFORE, WE ALSO FIND THAT THE ASSESSING OFFI CER HAS RIGHTLY GRANTED INTEREST TO THE ASSESSEES ON REFUND S DUE TO THEM. XXXXXXXXXXXXXXXXXXX 3.5.IT WAS FURTHER SUBMITTED THAT IN ONE OF THE CAS ES INTEREST HAS ALREADY BEEN GRANTED BY THE REVENUE AN D SAID GRANT OF INTEREST HAS NOT BEEN REVERSED. REFER ENCE IN THIS REGARD WAS MADE TO THE CASE OF M/S.VRUTI DISCRETIONARY FAMILY TRUST, IN RESPECT OF WHICH AO DISALLOWED THE APPLICATION OF THE ASSESSEE FOR GRAN T OF INTEREST AND LD. CIT(A) RESTORED THE MATTER BACK TO THE FILE OF AO TO ALLOW THE INTEREST AS PER LAW AND AO VIDE HIS ORDER DATED 11/2/2010 HAS ALLOWED SUCH INTEREST. REFERENCE IN THIS REGARD WAS MADE TO THE PAPERS FIL ED IN THE PAPER BOOK AS FOLLOWS: (1.) RECTIFICATION APPLICATION OF THE ASSESSEE FROM PGS. 106 TO 108 (2.) ORDER PASSED BY LD. CIT(A) DATED 19/9/2008 PAG E 109 TO 110 OF THE PAPER BOOK. (3.) ORDER GIVING EFFECT BY THE AO DATED 11/2/2010 PAGES 111 OF THE PAPER BOOK. (4.) NOTICE OF DEMAND UNDER SECTION 156 GRANTING IN TEREST OF RS.40,238/- PAGE 112 OF THE PAPER BOOK. (5.) COMPUTATION OF SUCH INTEREST AT PAGES 113 TO 1 14 OF THE PAPER BOOK. VAIBHAVI & OTHERS 11 3.6.THUS, IT WAS PLEADED BY LD. AR THAT IN VIEW OF ABOVE SUBMISSIONS THE NECESSARY RELIEF SHOULD BE GRANTED TO THE ASSESSEE. IN THIS MANNER GROUND NO.2 AND 3 WERE ARG UED BY LD. AR. 4.SO FAR AS IT RELATES TO GROUND NO.4, IT WAS SUBMI TTED BY AR THAT SINCE REVENUE HAS DEPRIVED THE ASSESSEE FOR LONG TIME FOR GRANTING THE INTEREST OR REFUND WITHOUT AN Y JUST CAUSE, ASSESSEE SHOULD ALSO BE HELD ENTITLED FOR RE CEIVING INTEREST ON INTEREST. 5.ON THE OTHER HAND, AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY LD. DR THAT AO HAS RIGHTFULLY DENIED I NTEREST TO THE ASSESSEE AND REFERRING TO THE ORDER PASSED B Y LD. CIT(A) IT WAS SUBMITTED BY LD. DR THAT IT HAS BEEN CLEARLY HELD BY LD. CIT(A) THAT ACCORDING TO THE FACTS OF T HE CASE IT CANNOT BE SAID THAT REFUND IS DUE TO THE ASSESSEE A S A RESULT OF ANY AMOUNT HAVING NOT BEEN PAID IN PURSUA NCE OF ANY ORDER OF ASSESSMENT SINCE, IN ORDER UNDER SECTI ON 143(3) ONLY PROTECTIVE ASSESSMENT WAS MADE BY THE A O, WITH THE UNDISPUTED POSITION OF THE AO BEING THAT I NCOME ON WHICH THE TAX WAS PAID BY THE ASSESSEE DID NOT B ELONG TO IT AND HENCE, THE ASSESSEE WAS NOT LIABLE TO THE DEMAND ON THE INCOME OF THE MAIN TRUST. SINCE THE ASSESSEE HAS DISCLOSED THE INCOME AS ITS OWN AND HAD PAID THE TA X ON ITS OWN VOLITION, AND IN ORDER TO PROTECT INTEREST OF REVENUE THE AO ONLY MADE THE PROTECTIVE ASSESSMENT. NO ENFORCEABLE DEMAND WAS CREATED ON THE ASSESSEE. ACCORDING TO WELL SETTLED POSITION OF LAW, IN PROTE CTIVE ASSESSMENT DEMAND IS ONLY CONTINGENT DEMAND AND NOT LEGALLY ENFORCEABLE AND THUS, IN REALITY ASSESSEE D ID NOT PAY TAX IN PURSUANCE OF ANY ORDER OF ASSESSMENT. LD . DR FURTHER REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MODI INDUSTRIES LTD. VS. CIT, 216 IT R 759 REFERRED TO IN PARA-6.2.3 OF ORDER OF LD. CIT(A) PL EADED THAT THE MEANING OF REGULAR ASSESSMENT IN SECTION 214, W OULD BE THAT A TAX PAYER IS ENTITLED TO CLAIM INTEREST O N THE EXCESS AMOUNT ADVANCE TAX PAID ONLY WITH REFERENCE TO ASSESSED TAX DETERMINED ON REGULAR ASSESSMENT AND FURTHER NO INTEREST CAN BE CLAIMED UNDER SECTION 21 4 BEYOND THE DATE OF REGULAR ASSESSMENT. IN THIS MANN ER LD. VAIBHAVI & OTHERS 12 DR PLEADED THAT INTEREST HAS RIGHTLY BEEN DENIED BY LD. CIT(A). 6.SO FAR AS IT RELATES TO GROUND NO.4, IT WAS SUBMI TTED BY LD. DR THAT ACCORDING TO DECISION OF HONBLE SUPREM E COURT IN THE CASE OF CIT VS. GUJARAT FLOURO CHEMICA LS, 358 ITR 291 (SC)W.E.F. 1/4/1989 THE INTEREST WHICH CAN BE GRANTED TO THE ASSESSEE ON REFUND AS PER SECTION 24 4A WOULD BE THE INTEREST PROVIDED IN THAT SECTION AND NO OTHER INTEREST ON SUCH STATUTORY INTEREST CAN BE PROVIDED . THUS, IT WAS PLEADED BY LD. DR THAT THERE IS NO PROVISION ACCORDING TO WHICH ASSESSEE CAN BE GRANTED INTEREST ON INTEREST. 7.WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTI ONS HAVE CAREFULLY BEEN CONSIDERED. IN THE PRESENT CASE S ASSESSEES ARE COMMON TO THE ASSESSEES WITH REGARD T O WHOM, EARLIER SPECIAL BENCH HAD DECIDED THE ISSUE T HAT ASSESSEE IS ENTITLED TO INTEREST ON THE REFUND. SPE CIAL BENCH ORDER WAS ON THE MERITS OF THE ISSUE AS WELL AS ON THE VALIDITY OR OTHERWISE OF SECTION 263 OF THE ACT WHICH WAS INVOKED BY THE CIT TO DENY THESE ASSESSES BENEF IT OF INTEREST WHICH WAS ALREADY GRANTED BY THE AO. SPECI AL BENCH HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSES SEE AND RELEVANT OBSERVATION OF SPECIAL BENCH HAVE ALRE ADY BEEN REPRODUCED ABOVE. 7.1.THE REVENUE CHALLENGED THE AFOREMENTIONED ORDER OF SPECIAL BENCH BEFORE HONBLE GUJARAT HIGH COURT AND GUJARAT HIGH COURT HAS NOT ONLY UPHELD THE DECISION OF SPECIAL BENCH ON THE ISSUE REGARDING GRANT OF INTER EST BUT HONBLE HIGH COURT HAS ALSO DIRECTED REVENUE AUTHOR ITIES THAT THEY SHOULD NOT DRAG THE ASSESSEESS TO UNNECES SARY AVOIDABLE LITIGATION. IN SPITE OF SUCH A WARNING GI VEN BY THE COURT TO THE REVENUE, THE DEPARTMENT AGAIN IN T HE PRESENT CASES HAS DRAGGED THESE ASSESSEES IN LITIGA TION FOR NON-GRANTING OF THE INTEREST. THE RELEVANT OBSERVAT IONS OF THEIR LORDSHIPS OF GUJARAT HIGH COURT HAVE ALREADY BEEN REPRODUCED. IT IS MADE CLEAR THAT THE FACTS OF THE PRESENT CASES AND THOSE WHICH WERE DECIDED BY THE SPECIAL B ENCH AND HONBLE GUJARAT HIGH COURT ARE PARI-MATERIA AND THIS FACT WAS NOT DISPUTED BY THE REVENUE. THE AO HAS VAIBHAVI & OTHERS 13 ADOPTED A VIEW WHICH IS CONTRARY TO THE DECISION OF SPECIAL BENCH AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT AND AS HE HAS AGAIN MADE THE DISALLOWANCE BY REJECT ING THE RECTIFICATION APPLICATION OF THE ASSESSEE. THUS , THE CONDUCT OF THE AO IS AGAINST THE DECISION RENDERED BY SPECIAL BENCH. SIMILARLY, LD. CIT(A) HAS DISREGARDE D THE SPECIAL BENCH BY SIMPLY HOLDING THAT THE SAME WOULD NOT BE APPLICABLE. ACCORDING TO LD. CIT(A) THE SAID ORD ER WAS IN RESPECT OF SECTION 244A.WE DONT FIND ANY JUSTIF ICATION IN SUCH DISREGARD SHOWN BY LD. CIT(A). THEREFORE, IN T HE FACTS & CIRCUMSTANCES OF THE CASE, SUCH CONDUCT OF THE RE VENUE IS NEITHER ACCORDING TO THE ACCEPTED POSITION OF LA W SETTLED BY THE HIGHER JUDICIAL FORUMS NOR IT IS APPRECIABLE FOR THE REASON THAT HONBLE GUJARAT HIGH COURT HAS ALREADY DIRECTED THE REVENUE NOT TO DRAG THE ASSESSEE IN UNNECESSARY AVOIDABLE LITIGATION. 7.2.THE ISSUE REGARDING GRANT OF INTEREST TO THE AS SESSEES IS CLEARLY COVERED BY THE DECISION OF THE SPECIAL B ENCH AS WELL AS HONBLE GUJARAT HIGH COURT WHICH HAVE NOT B EEN CONTENDED TO BE REVERSED OR MODIFIED. THEREFORE, WE DIRECT THE REVENUE TO GRANT THE INTEREST TO THE ASSESSEE A ND GROUND NO.2 & 3 ARE ALLOWED. 7.3.BEFORE PARTING WITH GROUND NOS. 2 & 3 OF THE ASSESSEES APPEAL, WE MAY MENTION HERE THAT IT IS A PROPER CASE WHERE COST CAN BE IMPOSED ON THE DEPARTMENT IN FAVOUR OF THE ASSESSEE FOR NOT FOLLOWING THE DIRECT IONS OF HONBLE GUJARAT HIGH COURT (SUPRA), BUT KEEPING IN VIEW THAT NO SUCH REQUEST WAS MADE BY LD. AR, WE RESTRAI N OURSELVES TO AWARD SUCH COST. 8.NOW COMING TO GROUND NO.4, THIS ISSUE HAS NOW BEE N SETTLED BY HONBLE SUPREME COURT BY THE DECISION RE LIED UPON BY LD. DR.THEREFORE, WE HOLD THAT ASSESSEE IS NOT ENTITLED TO INTEREST ON INTEREST. 9.IN THE RESULT, APPEALS FILED BY THESE ASSESSEES A RE PARTLY ALLOWED IN THE MANNER AFORESAID. 4 .WE FURTHER FIND THAT ON 7.9.2015,THE TRIBUNAL HAD DECIDED 35 APPEALS OF THE SAME GROUP WHEREIN IDENTI CAL GROUNDS WERE RAISED IN ITA 6090 6124/MUM/2013 AY 84-85. IN THAT MATTER THE ORDER OF THE TRIBUNAL DAT ED VAIBHAVI & OTHERS 14 25/3/2015 WAS FOLLOWED. RESPECTFULLY FOLLOWING THE ABOVE, WE HOLD THAT THE CONDUCT OF THE ASSESSING OFFICER(AO)IS AGAINST THE DECISION OF THE SPECIAL B ENCH AND HON'BLE GUJARAT HIGH COURT, THAT THE ISSUE REGARDIN G GRANT OF INTEREST TO THE ASSESSEE IS COVERED BY THE HONB LE COURT. THEREFORE, AO IS DIRECTED TO GRANT INTEREST TO THE ASSESSEE. GROUND NOS. 2 -4 ARE ALLOWED IN FAVOUR OF THE ASSES SEE. FOLLOWING THE ORDER OF THE TRIBUNAL DATED.25.03.2015(SUPRA),WE DECIDE GROUND NO.5 AGAIN ST THE ASSESSEE. 5. FOLLWING THE ABOVE ORDER FOR ITA/4712/MUM/2014,WE ALLOW ALL THE OTHER APPEALS IN FAVOUR OF THE ASSESS EE-TRUSTS IN PART. 3.3. IT IS NOTED BY US THAT THE FACTS AND ISSUES INVOLV ED IN THE APPEALS BEFORE US ARE IDENTICAL WITH THE ISSUES DEC IDED BY THE TRIBUNAL. IN VIEW OF THE SAME THE AO IS DIRECTED TO GRANT INTEREST TO THE ASSESSEE IN TERMS OF AFORESAID ORD ER OF THE TRIBUNAL. HE SHALL FOLLOW THE AFORESAID ORDER OF TH E TRIBUNAL IN ALL THESE APPEALS BEFORE US AND WITH RESPECT TO ALL OF THE GROUNDS. 4. IN THE RESULT, ALL THE APPEALS FILED BY THE RESPEC TIVE ASSESSEEE IN ITA NO.2900 TO 2923/MUM/2014 ARE PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 2 TH FEBRUARY, 2016. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) !' / JUDICIAL MEMBER #' / ACCOUNTANT MEMBER MUMBAI; # DATED : 12/02/2016 CTX? P.S/. .. VAIBHAVI & OTHERS 15 $!%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. & '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. + + , ( & ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI 5. /0 ) 1 , + &! 12 , / DR, ITAT, MUMBAI 6. 3 4 / GUARD FILE. / BY ORDER, * /& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI