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

ITA 4707/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2418 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: F
• Assessment Year: 1986-1987
• Appeal Filed On: 10-07-2014
• Court: TRIBUNAL
• Department Lawyers: DEBASHIS CHANDA
• Section: 143(3); 244A; 263; 154

Judgement Text

1 , ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI- G,BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT ME MBER & PARTHASARATHY CHOUDHURY,JUDICIAL MEMBER S N. ITA NO.& A.Y. APPELLANT RESPONDENT PAN ASSESSMENT YEAR -1986-87 1 4707/M/14 ULLAS DISCRETIONARY FAMILY TRUST; C/O., SEVANTILAL N. SHAH & CO., 28, DALAMAL CHAMBERS, 2ND FLOOR,17 NEW MARINE LINES , MUMBAI-400 020. ITO 12(2)(1), MUMBAI. AAATU5021 F 2 4708/M/14 UPPLAV DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI. AAATU5028 N 3 4709/M/14 UJAVAL DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI. AAATU5022 G 4 4710/M/14 UDAN DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI. AAATU5023 H 5 4711/M/14 UCHITA DISCRETIONARY FAMILY TRUST ITO 12(2)(1), MUMBAI. AAATU 5024 A /ASSESSEE BY :SHRI HEMANSHU SHAH / REVENUE BY :SHRI DEBASHIS CHANDA-(CIT-DR) / DATE OF HEARING : 27 - 08 -2015 / DATE OF PRONOUNCEMENT : 24 -11-2015 , 1961 1961 1961 1961 25 2525 254 44 4( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER BENCH - 1)IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPE LLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN THE POINTS OF LAW AND FACTS. 2) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT APPELLANT IS NOT ENTI TLED TO INTEREST ON REFUND OF RS.1,360/-. 3) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT APPELLANT IS NOT ELIG IBLE FOR INTEREST ON REFUND OF RS.4,900/-. 4) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LD. ASSESSING OFFICER BE DIRECTED TO GIVE REFUND OF ALL PRE-PAID TAXES WITH DUE INTEREST. 5) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT APPELLANT IS NOT ELI GIBLE FOR INTEREST ON INTEREST. 6)YOUR APPELLANT RESERVES THE RIGHT TO ADD, ALTER, AMEND ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AS MAY BE ADVISED FROM TIME TO TIME. WE WOULD LIKE TO MENTION HERE THAT WHILE ARGUING TH E LEAD APPEAL I.E.ITA/4707/MUM/2014,IT WAS STATED BY THE REPRESENTATIVES OF BOTH THE SIDES THAT FACTS ARE IDENTICAL IN RESPECT OF EACH OF THE APPEALS.THEREFORE,FOR THE SAKE OF CONVENIEN CE, A CONSOLIDATED ORDER IS BEING PASSED TO ADJUDICATE THE ABOVE APPEALS. BRIEF FACTS-(ITA NO.4707/MUM/2014) : 2. THE ASSESSEES ARE BENEFICIARIES OF K.KACHARADAS PAT EL SPECIFIC FAMILY TRUST(KKPSFT), HAVING 0.5% INTEREST IN PARENT TRUST.FOR AY.UNDER APPEAL, RETURN WAS FILED WITH ON 18/06/ 1986,SHOWING TOTAL INCOME OF RS.36,920/- AND PAID TAXES OF RS.5,400/-.THE AO COMPLETED THE ASSESSMENT U/S. 143(3) OF THE ACT ON 30.3.1987 DETERMINING THE INCOME OF THE ASSESSEE AT RS.43,920/- HOWEVER,THE ASSESSMENT WAS MADE ON PROT ECTIVE BASIS AS THE INCOME WAS ASSESSED TO TAX ON SUBSTANTIVE BASIS IN THE CASE OF MAIN-TRUST.THE MAIN-TRUST,NAMELY KKPSFT,WAS AGITATING THE MATTER IN FURTHER APPEALS. LATER ON,KKPSFT SETTLED THE DISPUTE UNDER KAR VIVAD SAMADHAN SCHEME(KVSS).IN THAT BACKG ROUND,THE INCOME IN THE HANDS OF 4707-4711/14 DISCRETIONARY FAMILY TRUST 2 THE ASSESSEE-TRUST WERE DELETED BY THE AO VIDE ORD ER,DATED 28/11/2000,PASSED U/S.155 OF THE ACT.WHILE COMPUTING THE INCOME OF THE ASSESSEE AT R S.NIL,THE AO ALLOWED THE REFUND AS UNDER: TOTAL TAXES PAID RS.500/- ADD: REFUND OF A.Y.84-85 ADJUSTED RS.860/- BAL. REFUND DUE RS.1,360/- THE ASSESSEE VIDE APPLICATION,DATED 07/12/2000,SOUG HT REFUND OF RS.1,360/-,TRANSFERRED IN THE CASE OF THE MAIN-TRUST ALONG WITH DUE INTEREST AND INTEREST ON REFUND AS ALSO INTEREST ON INTEREST.IT FILED A RECTIFICATION APPLICATION FOR I NTEREST ON REFUND UNDER SECTION 244A OF THE ACT TILL THE DATE OF REFUND ORDER FOR THE YEAR UNDER CO NSIDERATION. THE AO, WHILE DISPOSING THE APPLICATION FILED U/S. 154 OF THE ACT, HELD THAT RE FUND FOR THE ABOVE AY WAS ALLOWED VIDE ORDER DATED U/S.155(2), DATED 28/11/2000, THAT THE INTEREST ON THE SAME WAS NOT ALLOWED, THAT REFUND HAD ARISEN ON ACCOUNT OF DECLARATION MADE UN DER KVSS BY THE MAIN-TRUST, REFUND HAD ARISEN IN CASE OF BENEFICIARY TRUST, THAT THE MAIN TRUST HAD NOT BEEN PAID INTEREST ON THE DISPUTED INCOME,THAT THE BENEFICIARY TRUST COULD NO T BE ALLOWED ON CONSEQUENTIAL REFUND, THAT NO CLAIM FOR THE SAID REFUND WAS MADE IN THE RETURN OF INCOME, THAT THE CLAIM OF REFUND WAS MADE ONLY AFTER THE KVSS DECLARATION WAS FILED AND ACCEPTED, THAT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 244A OF THE ACT THE ASSESSEE WAS NOT ENTITLED TO INTEREST UNDER THAT SECTION.FINALLY, THE AO REJECTED THE APPLICATION FI LED BY THE ASSESSEE-TRUST AND THE FIRST APPELLATE AUTHORITY(FAA)CONFIRMED THE ORDER OF THE AO. 3. DURING THE COURSE OF HEARING BEFORE US,AUTHORISED R EPRESENTATIVE(AR)AND THE DEPARTMEN- TAL REPRESENTATIVE(DR)AGREED THAT IDENTICAL ISSUE H AS BEEN DELIBERATED UPON AND DECIDED BY THE TRIBUNAL IN OTHER GROUP CASES,FOLLOWING THE ORD ER OF THE SPECIAL BENCH,THAT THE HON BLE GUJARAT HIGH COURT HAD UPHELD THE ORDER OF THE SPEC IAL BENCH ON 26.06.2008 IN IT APPEAL NOS.1514 TO 1795OF 2006(PUNITABEN K.PATEL OSFDT AND 284 OTHER CASES),NOS. 573-618 AND1216-1233OF 2007 (MANJULABEN PRAMODBHAI & ORS)AN D NOS.182,204 OF 2002, NO.27-30 OF 2004(JANAK PRAMODBHAI PATEL & ORS).DIMISSING THE APPEALS FILED BY THE REVENUE,THE HONBLE HIGH COURT OBSERVED AS UNDER : AS REGARDS GRANT OF INTEREST ON REFUND, WE FIND T HAT TRIBUNAL WAS JUSTIFIED IN HOLDING THAT REFUND SHOULD BE GRANTED WITH INTEREST. WE ARE IN F ULL AGREEMENT WITH THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL. WE REPEAT THAT REVENUE SHOU LD NOT DRAG THE RESPONDENTS TO UNNECESSARY AVOIDABLE LITIGATION WE FIND THAT WHILE DECIDING 31 APPEALS FILED BY THE OTHER TRUSTS,ON 25.3.2015,THE F BENCH OF THE TRIBUNAL HAD HELD AS UNDER :- 3.3.IT IS UNDISPUTED FACT THAT IN VIEW OF THE SUB STANTIAL ASSESSABILITY OF THE INCOME IN THE HANDS O F THE MAIN TRUST NO INCOME IS ASSESSABLE IN THE HANDS OF THESE ASSESSEES. THUS, IT IS THE CASE OF THE ASSESSEE THAT WHATEVER TAX IS REFUNDED TO THE ASSES SEE, THE ASSESSEE IS ENTITLED TO GET 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 CASE S OF OTHER BENEFICIARIES THERE IS DECISION OF SPECIAL BENCH, WHICH IS DATED 7/7/2006, COPY OF WHI CH IS FILED AT PAGES 33 TO 63 OF THE PAPER BOOK AND IT WAS DECIDED BY THE SPECIAL BENCH THAT THE BE NEFICIARIES ARE ENTITLED TO GET THE INTEREST. 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 BEFORE SPECIAL BENCH IN ITIALLY SUCH INTEREST WAS GRANTED BY THE AO WHICH WAS WITHDRAWN BY THE CIT U/S.263 AND IT WAS H ELD THAT INTEREST WAS RIGHTLY GRANTED BY THE AO. REFERENCE WAS MADE TO THE FOLLOWING OBSERVATION S OF THE SPECIAL BENCH. 27.WE HEARD BOTH SIDES IN DETAIL AND CONSIDERED THE MATTER IN THE LIGHT OF THE EARLIER ORDERS OF THE DIFFERENT BENCHES OF THE TRIBUNAL ON THE SUB JECT AND THE PLETHORA OF MATERIALS PLACED BEFORE US ALONG WITH ASSESSMENT, APPEAL AND REVISIO N ORDERS. 28.THE FIRST ISSUE THAT CAME UP FOR CONSIDERATION I S WHETHER THE DISPUTE REGARDING THE ISSUE INVOLVED IN THESE APPEALS WERE CONTINUED TO EXIST A T THAT POINT, OF TIME. WE FIND THAT THIS 4707-4711/14 DISCRETIONARY FAMILY TRUST 3 QUESTION IS QUITE ACADEMIC. THE MAIN TRUSTS HAVE S OUGHT 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 E XISTED AT THAT POINT OF TIME AND THERE 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 RELEVANT INSTRUCTIONS ISSUED BY THE CBDJ IN THE CONTEXT OF KAR VIVAD SAMADHAN SCHEME, 1998.WE HAVE ALREADY SEEN THE RELEVANT QUES TION AND ANSWER TO THE QUESTION. THE CBDT HAS STATED IN UNEQUIVOCAL TERMS THAT DECLARATI ONS ARE TO BE MADE IN RESPECT OF SUBSTANTIVE ASSESSMENTS. THE BOARD HAS CLARIFIED TH AT THE PROTECTIVE DEMAND IS NOT SUBJECT TO RECOVERY UNLESS IT IS FINALLY UPHELD. THE BOARD HAS FURTHER EXPLAINED THAT ONCE THE DECLARATION IN A SUBSTANTIVE CASE OR YEAR IS ACCEPTED, THE TAX ARREAR IN PROTECTIVE CASE / YEAR WOULD NO LONGER BE VALID AND WILL BE RECTIFIED BY SUITABLE O RDERS 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 BENEFICIAL 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 SUBSTANTIV E BASIS. THEREFORE, IN THE LIGHT OF THE CIRCULAR, THE CORRESPONDING PROTECTIVE ASSESSMENTS MADE IN THE HANDS OF BENEFICIAL TRUSTS WOULD FADE AWAY AND THE DEMAND RAISED IN THOSE PRO TECTIVE ASSESSMENT WOULD NO LONGER BE VALID. WHEN THE ASSESSMENT IS NOT SUBSISTING AND TH E DEMAND IS NOT VALID, THE AMOUNT PAID BY THE ASSESSEE ALONG WITH THE RETURN SUBJECT TO PROTE CTIVE ASSESSMENT BECOMES REFUNDABLE TO THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED OPIN ION THAT THE ASSESSING OFFICER HAS RIGHTLY ACCEPTED THE PRAYERS OF THE ASSESSEES AND PASSED A PPROPRIATE ORDERS EXCLUDING THE INCOMES WHICH HAVE ALREADY BEEN CONSIDERED IN THE HANDS OF THE MAIN TRUSTS UNDER KVSS. THEREFORE, OBVIOUSLY, THE ASSESSING OFFICER IS JUSTIFIED IN FO LLOWING 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 CASE, THE INCOME UNDER DISPUTE IS THE SAME CONSIDERED IN THE HANDS OF THE MAIN TRUSTS AND ALSO CONSIDERED IN THE HANDS OF THE BENE FICIAL TRUSTS. KAR VIVAD SAMADHAN SCHEME, 1998 WAS INTRODUCED BY GOVERNMENT OF INDIA TO SETTLE THE PENDING LITIGATIONS AT DIFFERENT LEVELS AND COLLECT THE TAX ONCE FOR ALL AND REACH FINALITIES IN THE MATTERS CONNECTED THERETO. EVEN THOUGH KVSS WAS A SPECIAL SCHEME, TH E KVSS DID NOT PROPOSE TO TAX ANY INCOME TWICE. WHETHER UNDER THE REGULAR PROVISIONS OF THE INCOME-TAX ACT OR UNDER THE 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 D OUBLE TAXATION OF THE SAME INCOME CANNOT BE ENDORSED UNDER THE KVSS. IN OTHER WORDS, THE KAR VIVAD SAMADHAN SCHEME, 1998 DOES NOT EMPOWER THE INCOME-TAX DEPARTMENT TO TAX THE SA ME INCOME MORE THAN ONCE. THIS MUST BE MADE VERY CLEAR. 31.WHAT ARE THE SIMPLE FACTS AVAILABLE IN THESE CA SES? THE INCOMES OF THE MAIN TRUST HAVE BEEN DISTRIBUTED TO THE BENEFICIARY TRUSTS. THE BEN EFICIARY TRUSTS HAVE FILED RETURNS IN THEIR INDIVIDUAL HANDS. THIS POSITION WAS NOT ACCEPTED BY THE REVENUE. THEREFORE, SUBSTANTIVE ASSESSMENTS HAVE BEEN MADE IN THE HANDS OF MAIN TR USTS. IN ABUNDANT PRECAUTION PROTECTIVE ASSESSMENTS HAVE BEEN MADE IN THE HANDS OF THE RES PECTIVE BENEFICIARY TRUSTS. SUPPOSE THE PROPOSITION MADE OUT BY THE DEPARTMENT WAS ACCEPTAB LE TO THE ASSESSEE AND THE SUBSTANTIVE ASSESSMENTS MADE IN THE HANDS OF THE MAIN TRUSTS H AVE BEEN ACCEPTED BY THE ASSESSEE, WHAT WOULD BE THE POSITION OF THE CORRESPONDING PROTEC TIVE ASSESSMENTS MADE IN THE HANDS OF THE BENEFICIARY TRUSTS? THE PROTECTIVE ASSESSMENTS WOU LD HAVE BECOME INVALID AS A RESULT OF WHICH THE REVENUE WOULD REFUND THE AMOUNT OF TAX IF ANY PAID BY THE BENEFICIARY TRUSTS WHILE FILING THE RETURNS OF INCOME IN THEIR INDIVIDUAL CA PACITIES. 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 SET TLED THEIR SUBSTANTIVE ASSESSMENTS UNDER KVSS WHICH FOR ALL PRACTICAL PURPOSES 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 AS SUCH OR HAVING BEEN SETTLED 4707-4711/14 DISCRETIONARY FAMILY TRUST 4 UNDER AN AVAILABLE SCHEME KNOWN AS KAR VIVAD SAMAD HAN SCHEME, 1995. IN EITHER CASE THE PROTECTIVE ASSESSMENTS BECOME INVALID WHEREBY NO DE MAND 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 FOR PROTECTIVE ASSESSMENTS, SUCH TAXES HAVE TO BE REFUNDED TO THEM. 32.WE DO NOT FIND MUCH FORCE ON THE RELIANCE PLACED BY THE LEARNED STANDING COUNSEL ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF S AURASHTRA CEMENT & CHEMICAL INDUSTRIES VS. ITO 194 ITR 659. IN THAT CASE THERE WAS NO ASS ESSMENT AT ALL AND THE QUESTION OF REFUND WAS CONSIDERED IN THAT PERSPECTIVE WHICH IS QUITE D IFFERENT FROM THE PRESENT CASE. THE INCOME INVOLVED IN THE SUBSTANTIVE ASSESSMENT AS WELL AS I N THE PROTECTIVE ASSESSMENTS ARE ONE AND THE SAME. THE INCOME HAS BEEN ASSESSED SUBSTANTIVEL Y IN THE HANDS OF THE MAIN TRUSTS AND THE DEMAND SUBSEQUENTLY SETTLED UNDER KVSS. IT IS Q UITE UNNECESSARY TO REPEAT THAT THE INCOME HAS ALREADY BEEN ASSESSED IN THE HANDS OF THE MAIN TRUSTS. THEREFORE, NOTHING REMAINS THEREAFTER TO BE ASSESSED IN THE HANDS OF THE BENEF ICIARY TRUSTS, AS FAR AS THE INCOME OF MAIN TRUST IS CONCERNED. MOREOVER, A CASE OF ASSESSMENT CAN BE CONTEMPLATED IN THE PRE5ENT CASES BECAUSE THE STAND TAKEN BY THE ASSESSEES IS THAT TH E, INCOME OF THE MAIN TRUSTS HAS TO BE ASSESSED IN THE HANDS OF THE INDIVIDUAL BENEFICIARY TRUSTS. IT IS ON THE BASIS OF THAT PROPOSITION THAT THE RETURNS WERE FILED BY THE BENEFICIARY TRUS TS. WHILE RETURNS WERE FILED BY THE BENEFICIARY TRUSTS IN THEIR INDIVIDUAL CAPACITIES THEY ARE IN FACT OFFERING INCOME FOR TAXATION. SECTION 140A PROVIDES THAT WHEN AN ASSESSEE FILES A RETURN OF INCOME AND WHERE TAX IS DUE AS PER THE SAID RETURN, THE TAX SHALL BE PAID BY THE ASSESSEE BEFORE FILING THE RETURN OF INCOME AND THE PROOF OF SUCH PAYMENT OF TAX PROOF OF SUCH PAYMENT OF TAX SHALL BE ACCOMPANIED ALONGWITH THE RETURN OF INCOME. THIS IS CALLED SELF-ASSESSMENT. WHEN AN ASSESSEE FILES A RETURN WITH POSITIVE 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 INCOME COVERED BY THE SAID RETURN IS NOT TAXABLE THE TAX PAID BY THE ASSESSEE IN PURSUANCE OF THAT RETURN HAS TO BE RETURNED BY THE REVENUE. THEREFORE , REFUND OF TAX IS A MUST IN THIS CASE. THE PROPOSITION MADE BY THE CIT AGAINST THE REFUND OF T AX 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 C ASE IS A MANDATE OF LAW. WHEN SUCH A REFUND IS CALLED FOR, INTEREST HAS TO BE PAID AS IN TEREST IS COMPENSATORY IN NATURE. IT ALWAYS MOVES WITH THE PRINCIPLE AMOUNT. 34.THERE IS NO SUBSTANCE IN THE ARGUMENT OF THE REV ENUE THAT THE DELAY N THE REFUND WAS CAUSED BECAUSE OF THE CONDUCT OF THE ASSESSEES. IN FACT, THE ASSESSEE WAS QUESTIONING THE PROPOSITION OF THE REVENUE TO ASSESS THE INCOME IN THE HANDS OF THE MAIN TRUSTS. THAT IS WHY THE BENEFICIARY TRUSTS HAVE FILED THEIR INDIVIDUAL RETURNS OF INCOME DISCLOSING THE BENEFITS RECEIVED FROM THE MAIN TRUSTS ALSO. BUT WHEN KVSS WAS PRONOUNCED BY THE GOVERNMENT OF INDIA, IT WAS FOR THE ASSESSEES TO DECIDE WHETHER T O TAKE BENEFIT OUT OF THAT OR NOT. THEREFORE, 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 APPELLATE FORUMS. THEREFORE, THERE IS NO MERIT IN THE ARGUMENT OF THE REVENUE TH AT 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 REFUNDS DUE TO THEM. X XXXXXXXXXXXXXXXXXX 3.5.IT WAS FURTHER SUBMITTED THAT IN ONE OF THE CAS ES INTEREST HAS ALREADY BEEN GRANTED BY THE REVENUE AND SAID GRANT OF INTEREST HAS NOT BEEN REV ERSED. REFERENCE IN THIS REGARD WAS MADE TO THE CASE OF M/S.VRUTI DISCRETIONARY FAMILY TRUST, I N RESPECT OF WHICH AO DISALLOWED THE APPLICATION OF THE ASSESSEE FOR GRANT OF INTEREST A ND 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 T O THE PAPERS FILED 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 PAGE 109 TO 110 OF THE PAPER BOOK. (3.) ORDER GIVING EFFECT BY THE AO DATED 11/2/2 010 PAGES 111 OF THE PAPER BOOK. 4707-4711/14 DISCRETIONARY FAMILY TRUST 5 (4.) NOTICE OF DEMAND UNDER SECTION 156 GRANT ING INTEREST OF RS.40,238/- PAGE 112 OF THE PAPER BOOK. (5.) COMPUTATION OF SUCH INTEREST AT PAGES 113 TO 114 OF THE PAPER BOOK. 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 ARGUED 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 INTER EST OR REFUND WITHOUT ANY JUST CAUSE, ASSESSEE SHOULD ALSO BE HELD ENTITLED FOR RECEIVING INTERES T ON INTEREST. 5.ON THE OTHER HAND, AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY LD. DR THAT AO HAS RIGHTFULLY DENIED INTEREST TO THE ASSESSEE AND REFE RRING TO THE ORDER PASSED BY LD. CIT(A) IT WAS SUBMITTED BY LD. DR THAT IT HAS BEEN CLEARLY HELD B Y LD. CIT(A) THAT ACCORDING TO THE FACTS OF THE CASE IT CANNOT BE SAID THAT REFUND IS DUE TO T HE ASSESSEE AS A RESULT OF ANY AMOUNT HAVING NOT BEEN PAID IN PURSUANCE OF ANY ORDER OF ASSESSME NT SINCE, IN ORDER UNDER SECTION 143(3) ONLY PROTECTIVE ASSESSMENT WAS MADE BY THE AO, WITH THE UNDISPUTED POSITION OF THE AO BEING THAT INCOME ON WHICH THE TAX WAS PAID BY THE ASSES SEE DID NOT BELONG 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 SETTL ED POSITION OF LAW, IN PROTECTIVE ASSESSMENT DEMAND IS ONLY CONTINGENT DEMAND AND NOT LEGALLY EN FORCEABLE AND THUS, IN REALITY ASSESSEE DID NOT PAY TAX IN PURSUANCE OF ANY ORDER OF ASSESSMEN T. LD. DR FURTHER REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MODI INDUST RIES LTD. VS. CIT, 216 ITR 759 REFERRED TO IN PARA-6.2.3 OF ORDER OF LD. CIT(A) PLEADED THAT T HE MEANING OF REGULAR ASSESSMENT IN SECTION 214, WOULD BE THAT A TAX PAYER IS ENTITLED TO CLAI M INTEREST ON 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 214 BEYOND TH E DATE OF REGULAR ASSESSMENT. IN THIS MANNER LD. DR PLEADED THAT INTEREST HAS RIGHTLY BEE N 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 SUPREME COURT IN THE CASE OF CIT VS. GUJARA T FLOURO CHEMICALS, 358 ITR 291 (SC)W.E.F. 1/4/1989 THE INTEREST WHICH CAN BE GRANT ED TO THE ASSESSEE ON REFUND AS PER SECTION 244A 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 INTE REST. 7.WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTI ONS HAVE CAREFULLY BEEN CONSIDERED. IN THE PRESENT CASES ASSESSEES ARE COMMON TO THE ASSESSEES WITH REGARD TO WHOM, EARLIER SPECIAL BENCH HAD DECIDED THE ISSUE THAT ASSESSEE IS ENTIT LED TO INTEREST ON THE REFUND. SPECIAL 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 ASS ESSES BENEFIT OF INTEREST WHICH WAS ALREADY GRANTED BY THE AO. SPECIAL BENCH HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE AND RELEVANT OBSERVATION OF SPECIAL BENCH HAVE ALREADY BEEN REP RODUCED ABOVE. 7.1.THE REVENUE CHALLENGED THE AFOREMENTIONED ORDE R OF SPECIAL BENCH BEFORE HONBLE GUJARAT HIGH COURT AND GUJARAT HIGH COURT HAS NOT O NLY UPHELD THE DECISION OF SPECIAL BENCH ON THE ISSUE REGARDING GRANT OF INTEREST BUT HONBL E HIGH COURT HAS ALSO DIRECTED REVENUE AUTHORITIES THAT THEY SHOULD NOT DRAG THE ASSESSE ESS TO UNNECESSARY AVOIDABLE LITIGATION. IN SPITE OF SUCH A WARNING GIVEN BY THE COURT TO THE REVENUE, THE DEPARTMENT AGAIN IN THE PRESENT CASES HAS DRAGGED THESE ASSESSEES IN LITIGA TION FOR NON-GRANTING OF THE INTEREST. THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS OF GUJARAT HIGH COURT HAVE ALREADY BEEN REPRODUCED. IT IS MADE CLEAR THAT THE FACTS OF THE PRESENT CAS ES AND THOSE WHICH WERE DECIDED BY THE SPECIAL BENCH AND HONBLE GUJARAT HIGH COURT ARE PARI-MATER IA AND THIS FACT WAS NOT DISPUTED BY THE REVENUE. THE AO HAS ADOPTED A VIEW WHICH IS CONTR ARY TO THE DECISION OF SPECIAL BENCH AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT AND AS HE HAS AGAIN MADE THE DISALLOWANCE BY REJECTING THE RECTIFICATION APPLICATION OF THE ASSE SSEE.THUS, THE CONDUCT OF THE AO IS AGAINST THE DECISION RENDERED BY SPECIAL BENCH. SIMILARLY, LD. CIT(A) HAS DISREGARDED THE SPECIAL BENCH BY SIMPLY HOLDING THAT THE SAME WOULD NOT BE APPL ICABLE. ACCORDING TO LD. CIT(A) THE SAID ORDER WAS IN RESPECT OF SECTION 244A.WE DONT FIND ANY JUSTIFICATION IN SUCH DISREGARD SHOWN 4707-4711/14 DISCRETIONARY FAMILY TRUST 6 BY LD. CIT(A). THEREFORE, IN THE FACTS & CIRCUMSTA NCES OF THE CASE, SUCH CONDUCT OF THE REVENUE IS NEITHER ACCORDING TO THE ACCEPTED POSIT ION OF LAW SETTLED BY THE HIGHER JUDICIAL FORUMS NOR IT IS APPRECIABLE FOR THE REASON THAT H ONBLE GUJARAT HIGH COURT HAS ALREADY DIRECTED THE REVENUE NOT TO DRAG THE ASSESSEE IN U NNECESSARY AVOIDABLE LITIGATION. 7.2.THE ISSUE REGARDING GRANT OF INTEREST TO THE A SSESSEES IS CLEARLY COVERED BY THE DECISION OF THE SPECIAL BENCH AS WELL AS HONBLE GUJARAT HIGH C OURT WHICH HAVE NOT BEEN CONTENDED TO BE REVERSED OR MODIFIED.THEREFORE, WE DIRECT THE REVE NUE TO GRANT THE INTEREST TO THE ASSESSEE AND GROUND NO.2 & 3 ARE ALLOWED. 7.3.BEFORE PARTING WITH GROUND NOS. 2 & 3 OF THE A SSESSEES 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 DIRECTIONS OF HONBLE GUJARAT HIG H COURT (SUPRA), BUT KEEPING IN VIEW THAT NO SUCH REQUEST WAS MADE BY LD. AR, WE RESTRAIN OURSEL VES TO AWARD SUCH COST. 8.NOW COMING TO GROUND NO.4, THIS ISSUE HAS NOW B EEN SETTLED BY HONBLE SUPREME COURT BY THE DECISION RELIED UPON BY LD. DR.THEREFORE, WE HO LD 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 IDENTICAL GROUNDS WERE RAISED IN ITA 6090 6124/MUM/2013 AY 84-85. IN THAT MATTER THE ORDER OF THE TRIBUNAL DATED 25/3/2015 WA S FOLLOWED.RESPECTFULLY FOLLOWING THE ABOVE,WE HOLD THAT THE CONDUCT OF THE ASSESSING OFF ICER(AO)IS AGAINST THE DECISION OF THE SPECIAL BENCH AND HON'BLE GUJARAT HIGH COURT,THAT T HE ISSUE REGARDING GRANT OF INTEREST TO THE ASSESSEE IS COVERED BY THE HONBLE COURT.THEREFORE, AO IS DIRECTED TO GRANT INTEREST TO THE ASSESSEE. GROUND NOS. 2-4 ARE ALLOWED IN FAVOUR OF THE ASSESSEE.FOLLOWING THE ORDER OF THE TRIBUNAL DT.25.03. 2015(SUPRA),WE DECIDE GR. NO.5 AGAINST THE ASSESSEE. 5. FOLLWING THE ABOVE ORDER FOR ITA/4707/MUM/2014,WE A LLOW ALL THE OTHER APPEALS IN FAVOUR OF THE ASSESSEE-TRUSTS IN PART. AS A RESULT APPEALS FILED BY THE ALL THE ASSESSEES STAND PARTLY ALLOWED . . ORDER PRONOUNCED IN THE O PEN COURT ON 24 TH NOVEMBER, 2015. 24 , 2015 SD/- SD/- ( / PARTHASARATHY CHOUDHURY ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 24.11.2015 . . . JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1 . APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.