K. KACHRADAS PATEL SPECIFIC FAMILY TRUST B.O.I NO.1, (DEF. CORPUS), MUMBAI V. ITO 12(2)(1), MUMBAI

ITA 6090/MUM/2013

• Counselvise Citation: 609019914 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 1984-1985
• Appeal Filed On: 18-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VINITA J MENON
• Keywords: Revision of order
• Section: 143(3); 244A; 263

Judgement Text

, ' INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A , BENCH , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMB ER & SANJAY GARG,JUDICIAL MEMBER S N. ITA NO.& A.Y. APPELLANT RESPONDENT PAN 1. 6090/MUM/2013 AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUSTB.O.I NO.1(DEF. CORPUS)C/O., SEVANTILAL N. SHAH & CO.28, DALAMAL CHAMBERS, 2ND FLOOR 17, NEW MARINE LINES , MUMBAI - 400 020. ITO 1 2(2)(1), MUMBAI. AAABK 0897 K 2. 609 1 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUSTB.O.I NO. 2 (DEF. CORPUS) ITO 1 2(2)(1), MUMBAI. AAABK 0898 G 3. 609 2 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST ,, B.O.I NO. 3 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0912 F 4 609 3 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 4 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0899 H 5. 609 4 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 5 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0900 F 6. 609 5 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 6 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0913 E 7. 609 6 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 7 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0901E 8. 609 7 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 8 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0914 D 9. 609 8 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O. I NO. 9 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0902 H 10 609 9 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 10 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0930 D 11 6 100 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B .O.I NO. 11 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0915 C 12 6 101 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 12 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0916 B 13 6 102 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRU ST , B.O.I NO. 13 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0903 G 14 6 103 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 14 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0927 G 15 6 104 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0917 A 16 6 105 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 16 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0897 K 17 6 106 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FA MILY TRUST , B.O.I NO. 17 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0918 R 18 6 107 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0905 A 19 6 108 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFI C FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0921 A 20 6 109 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0923 C 21 6 110 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPE CIFIC FAMILY TRUSTB.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0907 C 22 6 111 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUSTB.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0931 C 6090/M/13 FAMILY TRUST BOI GROUP 2 23 6 112 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0910 H 24 6 113 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0911 G 25 6 114 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PA TEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0919 Q 26 6 115 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0906 D 27 6 116 /MUM/2013 , AY. 1984 - 85 K KACHRADA S PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0920 B 28 6 117 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0922 D 29 6 118 /MUM/2013 , AY. 1984 - 85 K KACH RADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0924 F 30 6 119 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0908 P 31 6 120 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0909 N 32 6 121 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0925 E 33 6 122 /MUM/2013 , AY. 1984 - 8 5 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0929 J 34 6 123 /MUM/2013 , AY. 1984 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0926 H 35 6 124 /MUM/2013 , AY. 19 84 - 85 K KACHRADAS PATEL SPECIFIC FAMILY TRUST , B.O.I NO. 15 (DEF. CORPUS) ITO 12(2)(1), MUMBAI AAABK 0928 K /ASSESSEE BY :SHRI HIMANSHU SHAH / REVENUE BY : SMT.VINITA J MENON / DATE OF HEARING : 07 - 0 9 - 2015 / DATE OF PRONOUNCEMENT : 07 - 0 9 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER BENCH - ALL THE ABOVE APPEALS HAVE BEEN FILED BY THE RESPECTIVE ASSESSEES AGAINST A CONSOLIDATED ORDER , DATED 17.09.2013, OF CIT(A) - 23 , MUMBAI.GROUNDS OF APPEAL IN ALL THESE APPEALS ARE IDENTICA L AND READ AS UNDER: 1) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS 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 APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRE D IN HOLDING THAT APPELLANT IS NOT ENTITLED TO INTEREST ON REFUND OF RS.40,442/ - . 3) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT APPELLANT IS NOT ELIGIBLE FOR INTEREST ON REFUND OF RS. L 1,138/ - . 4) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT APPELLANT IS NOT ELIGIBLE FOR INTEREST ON INTEREST. WE WOULD LIKE TO MENTION HERE THAT WHILE ARGUING THE LEAD APPEAL I.E.ITA/ 6090/MUM/2013 , IT WAS STATED BY THE REPRESENTATIVES OF BOTH THE SIDES THAT FACTS ARE IDENTICAL IN RESPECT OF EACH OF THE 6090/M/13 FAMILY TRUST BOI GROUP 3 APPEAL S .THERE F ORE , FOR THE SAKE OF CONVENIENCE, A CONSOLIDATED ORDER IS BEING PASSED TO ADJUDICATE THE ABOVE APPEALS . BRIEF FACTS - ( ITA NO .6090/MUM/2013 ) : 2. THE ASSESSEE IS BENEFICIARY OF K.KACHARADAS PATEL SPECIFIC FAMILY TRUST(KKPSFT), HAVING 0.5% PRESENT SHARE AND 0.5%DEFERRED SHAREIN PARENT TRUST.FOR AY.UNDER APPEAL,RETURN WAS FILED WITH ON 23/6/1984,SHOWING TOTAL INCOME OF RS. 1,10,33 5/ - .THE RETURNED INCOME WAS ACCEPTED VIDE ORDER,DATED 27/2/1987,PASSED UNDER SECTION 143(3) OF THE ACT.HOWEVER,THE ASSESSMENT WAS MADE ON PROTECTIVE BASIS AS THE INCOME WAS ASSESSED TO TAX ON SUBSTANTIVE BASIS IN THE CASE OF MAIN - TRUST.THE MAIN - TRUST,NAM ELY KKPSFT,WAS AGITATING THE MATTER IN FURTHER APPEALS.LATER ON, KKPSFT SETTLED THE DISPUTE UNDER KAR VIVAD SAMADHAN SCHEME(KVSS).IN THAT BACKGROUND,THE INCOME IN THE HANDS OF THE ASSESSEE - TRUST WERE DELETED BY THE AO VIDE ORDER,DATED 28/11/2000,PASSED U / S. 155 OF THE ACT.WHILE COMPUTING THE INCOME OF THE ASSESSEE AT RS.NIL,THE AO ALLOWED THE REFUND AS UNDER: TOTAL TAXES PAID RS. 51,580/ - LESS: REFUNDED VIDE ORDER DT. 29/2/88 RS. 40,442/ - BAL. REFUND DU E RS. 11,138/ - THE ASSESSEE VIDE APPLICATION,DATED 7/12/2000,SOUGHT REFUND OF RS.40,442/ - ,TRANSFERRED IN THE CASE OF THE MAIN - T RUST ALONG WITH DUE INTEREST AND INTEREST ON REFUND AS ALSO INTEREST ON INT EREST.IT FILED A RECTIFICATION APPLICATION FOR INTEREST ON REFUND UNDER SECTION 244A OF T HE ACT TILL THE DATE OF REFUND. AS PER ASSESSEE,IT HAD PAID ADVANCE TAX OF RS.31,780/ - AND SELF ASSESSMENT TAX OF RS. 19,800/ - .THUS,THE THE TOTAL AMOUNT OF TAX PAID BY I T WAS A SUM OF RS.51,580/ - .IN PURSUANCE TO ORDER PASSED UNDER SECTION 155(2) OF THE ACT AND AS PER SAID COMPUTATION A REFUND OF RS.40,442/ - WAS GRANTED TO THE ASSESSEE AND THE BALANCE AMOUNT OF RS.11,138/ - WAS REFUNDED TO THE ASSESSEE. IT ASKED THE AO TO GR ANT INTEREST ON THE AFOREMENTIONED REFUND OF RS.40,442/ - TILL 29.02.1988 AND FOR A SUM OF RS.11,138 / - TILL 28.11.2000.BUT ,THE AO REJE CTED THE APPLICATION FILED BY THE ASSESSEE - TRUST AND THE FIRST APPELLATE AUTHORITY (FAA)CONFIRMED THE ORDER OF THE AO. 3. DU RING THE COURSE OF HEARING BEFORE US,AUTHORISED REPRESENTATIVE(AR)AND THE DEPARTMENTAL REPRESENTATIVE(DR)AGREED THAT IDENTICAL ISSUE HAS BEEN DELIBERATED UPON AND DECIDED BY THE TRIBUNAL IN OTHER GROUP CASES,FOLLOWING THE ORDER OF THE SPECIAL BENCH,THAT T HE HON BLE GUJARAT HIGH COURT HAD UPHELD THE ORDER OF THE SPECIAL BENCH ON 26. 0 6.2008 IN IT APPEAL NOS. 1514 TO 1795OF 2006(PUNITABEN K. PATEL OSFDT AND 284 OTHER CASES ), NO S . 573 - 618AND1216 - 1233OF 2007 (MANJULABEN PRAMODBHAI & ORS) AND 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 THAT T RIBUNAL WAS JUSTIFIED IN HOLDING THAT REFUND SHOULD BE GRANTED WITH IN TEREST . WE ARE IN FULL AGREEMENT WITH THE ORDER OF THE S PECIAL B ENCH OF THE TRIBUNAL. WE REPEAT THAT REVENUE SHOULD NOT DRAG THE RESPONDENTS TO UNNECESSARY AVOIDABLE LITIGATION WE FIND THAT WHILE DECIDING 31 APPEALS FILED BY THE OTHER TRUSTS, ON 25.3.20 1 5 , THE F BENCH OF THE T RIBUNAL HAD HELD AS UNDER : - 3.3.IT IS UNDISPUTED FACT THAT IN VIEW OF THE SUBSTANTIAL ASSESSABILITY OF THE INCOME IN THE HANDS OF 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 ASSESSEE, 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 CASES OF OTHER BENEFICIARIES THERE IS DECISION OF SPECIAL BENCH, 6090/M/13 FAMILY TRUST BOI GROUP 4 WHICH 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 INTEREST. THE SPECIAL BENC H WHILE DECIDING THIS ISSUE IN FAVOUR OF 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 INITIALLY SUCH INTERES T WAS GRANTED BY THE AO WHICH WAS WITHDRAWN BY THE CIT U/S.263 AND IT WAS HELD THAT INTEREST WAS RIGHTLY GRANTED BY THE AO. REFERENCE WAS MADE TO THE FOLLOWING OBSERVATIONS 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 SUBJECT AND THE PLETHORA OF MATERIALS PLACED BEFORE US ALONG WITH ASSESSMENT, APPEAL AND REVISION ORDERS. 28.THE FIRST ISSUE THAT CAME UP FOR CONSIDERATION IS WHETHER THE DI SPUTE REGARDING THE ISSUE INVOLVED IN THESE APPEALS WERE CONTINUED TO EXIST AT THAT POINT, OF TIME. WE FIND THAT THIS QUESTION IS QUITE ACADEMIC. THE MAIN TRUSTS HAVE SOUGHT SETTLEMENT OF THEIR SUBSTANTIVE ASSESSMENTS UNDER KVSS WHICH HAVE BEEN ACCEPTED A ND ACTED UPON BY THE DEPARTMENT. THAT ITSELF SHOWED THAT THE CONTROVERSY CONTINUED AND EXISTED AT THAT POINT OF TIME AND THERE IS NO DOUBT THAT THE ISSUE WAS PENDING BEFORE THE HIGH COURT IN REFERENCE JURISDICTION. THEREFORE, TO MAKE THE MATTER CLEAR ,WE STATE THAT THE COMMISSIONER OF INCOME - TAX WAS NOT CORRECT IN HOLDING THAT SUCH A CONTROVERSY DID NOT EXIST. 29.WE FURTHER FIND THAT THE ANSWER TO THE CONTROVERSY CROPPED UP IN THESE CASES IS AVAILABLE IN THE RELEVANT INSTRUCTIONS ISSUED BY THE CBDJ IN TH E CONTEXT OF KAR VIVAD SAMADHAN SCHEME, 1998.WE HAVE ALREADY SEEN THE RELEVANT QUESTION AND ANSWER TO THE QUESTION. THE CBDT HAS STATED IN UNEQUIVOCAL TERMS THAT DECLARATIONS ARE TO BE MADE IN RESPECT OF SUBSTANTIVE ASSESSMENTS. THE BOARD HAS CLARIFIED THA T 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 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 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 SUBSTANTIVE BASIS. THEREFORE, IN THE LIGHT OF THE CIRCULAR, THE CORRESPONDING PROTECTIVE ASSESSMENTS MADE IN THE HANDS OF BENEFICIAL TRUS TS WOULD FADE AWAY AND THE DEMAND RAISED IN THOSE PROTECTIVE ASSESSMENT WOULD NO LONGER BE VALID. WHEN THE ASSESSMENT IS NOT SUBSISTING AND THE DEMAND IS NOT VALID, THE AMOUNT PAID BY THE ASSESSEE ALONG WITH THE RETURN SUBJECT TO PROTECTIVE ASSESSMENT B ECOMES REFUNDABLE TO THE ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY ACCEPTED THE PRAYERS OF THE ASSESSEES AND PASSED APPROPRIATE ORDERS EXCLUDING THE INCOMES WHICH HAVE ALREADY BEEN CONSIDERED IN THE H ANDS OF THE MAIN TRUSTS UNDER KVSS. THEREFORE, OBVIOUSLY, THE ASSESSING OFFICER 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 TW ICE. 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 BENEFICIAL TRUSTS. KAR VIVAD SAMADHAN SCHEME, 1998 WAS INTRODUCED BY GOVERNMENT OF INDIA TO SETTLE THE PENDI NG 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, THE KVSS DID NOT PROPOSE TO TAX ANY INCOME TWICE. WHETHER UNDER THE REGULAR PROVISIONS OF T HE 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 DOUBLE TAXATION OF THE SAME INCOME CANNOT BE ENDORSED UNDER THE KVSS. IN OTHER WORD S, 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. 6090/M/13 FAMILY TRUST BOI GROUP 5 31.WHAT ARE THE SIMPLE FACTS AVAILABLE IN THESE CASES? THE INCOMES OF THE MAIN TRUST HAVE BEEN DISTRIB UTED TO THE BENEFICIARY TRUSTS. THE BENEFICIARY 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 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 ACCEPTABLE TO THE ASSESSEE AND THE SUBSTANTIVE ASSESSMENTS MADE IN THE HANDS OF THE MAIN TRUSTS HAVE BEEN AC CEPTED BY THE ASSESSEE, WHAT WOULD BE THE POSITION OF THE CORRESPONDING PROTECTIVE ASSESSMENTS MADE IN THE HANDS OF THE BENEFICIARY TRUSTS? THE PROTECTIVE ASSESSMENTS WOULD 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 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 INTERVENT ION OF KVSS. THE MAIN TRUSTS HAVE SETTLED 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 THE WHOLE PROCESS IS NOT DIFFERENT FROM THE SUBSTANTIVE ASSESSMENTS HAVING BEEN ACCEPTED BY THE ASSESSEES AS SUCH OR HAVING BEEN SETTLED UNDER AN AVAILABLE SCHEME KNOWN AS KAR VIVAD SAMADHAN SCHEME, 1995. IN EITHER CASE THE PROTECTIVE 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 FOR PROTECTIVE ASSESSMENTS, SUCH TAXES HAVE TO BE REFUNDED TO THEM. 32.WE DO NOT FIND MUCH FORCE ON THE RELIANC E PLACED BY THE LEARNED STANDING COUNSEL ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES VS. ITO 194 ITR 659. IN THAT CASE THERE WAS NO ASSESSMENT AT ALL AND THE QUESTION OF REFUND WAS CONSIDERED IN THAT PE RSPECTIVE WHICH IS QUITE DIFFERENT FROM THE PRESENT CASE. THE INCOME INVOLVED IN THE SUBSTANTIVE 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 THE D EMAND SUBSEQUENTLY SETTLED UNDER KVSS. IT IS QUITE 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 BENEFICIARY TRUSTS, AS FAR AS THE I NCOME 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 THE, 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 TRUSTS. 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 POSITION IS VERY CLEAR. AS ALREADY OBSERVED IN THE ABOVE PARAGRAPH, THE REFUND OF TAX IN THE PRESENT CASE IS A MANDATE OF LAW. WHEN SUCH A REFUND IS CALLED FOR, INTEREST HAS TO BE PAID AS INTER EST IS COMPENSATORY IN NATURE. IT ALWAYS MOVES WITH THE PRINCIPLE AMOUNT. 34.THERE IS NO SUBSTANCE IN THE ARGUMENT OF THE REVENUE THAT THE DELAY N THE REFUND WAS CAUSED BECAUSE OF THE CONDUCT OF THE ASSESSEES. IN FACT, THE ASSESSEE WAS QUESTIONING THE PR OPOSITION 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 6090/M/13 FAMILY TRUST BOI GROUP 6 MAIN TRUSTS ALSO. BUT WHEN KVSS WAS PRONOUNCED BY T HE GOVERNMENT OF INDIA, IT WAS FOR THE ASSESSEES TO DECIDE WHETHER TO 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 THAT THE DELAY WAS CAUSED BY THE CONDUCT OF THE ASSESSEES. 35. THEREFORE, WE ALSO FIND THAT THE ASSESSING OFFICER HAS RIGHTLY GRANTED INTEREST TO THE ASSESSEES ON REFUNDS DUE TO THEM. XXXXXXXXXXXXXXXXXXX 3.5.IT WAS FURTHER SUBMITTED THAT IN ONE OF THE CASES INTEREST HAS ALREADY BEEN GRANTED BY THE REVENUE AND SAID GRANT OF INTEREST HAS NOT BEEN REVERSED. REFERENCE 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 GRANT 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 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 11/2/2010 PAGES 111 OF THE PAPER BOOK. (4.) NOTICE OF DEMAND UNDER SECTION 156 GRANTING INTEREST OF RS.40,238/ - PAGE 112 OF THE PAPER BOOK. (5.) COMP UTATION 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 SUBMITTED BY AR THAT SINCE REVENUE HAS DEPRIVED THE ASSESSEE FOR LONG TIME FOR GRANTING THE INTEREST OR REFUND WITHOUT ANY JUST CAUSE, ASSESSEE SHOULD ALSO BE HELD ENTITLED FOR RECEIVING INTEREST 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 REFERRING TO THE ORDER PASSED BY LD. CIT(A) IT WAS SUBMITTED BY LD. DR THAT IT HAS BEEN CLEARLY HELD BY LD. CIT(A) THAT ACC ORDING TO THE FACTS OF THE CASE IT CANNOT BE SAID THAT REFUND IS DUE TO THE ASSESSEE AS A RESULT OF ANY AMOUNT HAVING NOT BEEN PAID IN PURSUANCE OF ANY ORDER OF ASSESSMENT 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 ASSESSEE 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 TAX 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 PROTECTIVE A SSESSMENT DEMAND IS ONLY CONTINGENT DEMAND AND NOT LEGALLY ENFORCEABLE AND THUS, IN REALITY ASSESSEE DID 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 INDUSTRI ES LTD. VS. CIT, 216 ITR 759 REFERRED TO IN PARA - 6.2.3 OF ORDER OF LD. CIT(A) PLEADED THAT THE MEANING OF REGULAR ASSESSMENT IN SECTION 214, WOULD BE THAT A TAX PAYER IS ENTITLED TO CLAIM INTEREST ON THE EXCESS AMOUNT ADVANCE TAX PAID ONLY WITH REFEREN CE TO ASSESSED TAX DETERMINED ON REGULAR ASSESSMENT AND FURTHER NO INTEREST CAN BE CLAIMED UNDER SECTION 214 BEYOND THE DATE OF REGULAR ASSESSMENT. IN THIS MANNER LD. DR PLEADED THAT INTEREST HAS RIGHTLY BEEN DENIED BY LD. CIT(A). 6.SO FAR AS IT RELATES TO GROUND NO.4, IT WAS SUBMITTED BY LD. DR THAT ACCORDING TO DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. GUJARAT FLOURO CHEMICALS, 358 ITR 291 (SC)W.E.F. 1/4/1989 THE INTEREST WHICH CAN BE GRANTED 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 6090/M/13 FAMILY TRUST BOI GROUP 7 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 CONTENTIONS 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 ENTITLED TO INTEREST ON THE REFUND. SPEC IAL 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 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 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 UPHEL D THE DECISION OF SPECIAL BENCH ON THE ISSUE REGARDING GRANT OF INTEREST BUT HONBLE HIGH COURT HAS ALSO DIRECTED REVENUE AUTHORITIES THAT THEY SHOULD NOT DRAG THE ASSESSEESS 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 LITIGATION 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 CASES AND THOSE WHICH WERE DECIDED BY THE SPECIAL BENCH AND HONBLE GUJARAT HIGH COURT ARE PARI - MATERIA AND THIS FACT WAS NOT DISPUTED BY THE REVENUE. THE AO HAS ADOPTED A VIEW WHICH IS CONTRARY TO THE DECISION OF SP ECIAL 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 ASSESSEE.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 APPLICABLE. ACCORDING TO LD. CIT(A) THE SAID ORDER WAS IN RESPECT OF SECTION 244A.WE DONT FIND ANY JUSTIFICATION IN SUCH DISREGARD SHOWN BY LD. CIT(A). THER EFORE, IN THE FACTS & CIRCUMSTANCES OF THE CASE, SUCH CONDUCT OF THE REVENUE IS NEITHER ACCORDING TO THE ACCEPTED POSITION OF LAW SETTLED BY THE HIGHER JUDICIAL FORUMS NOR IT IS APPRECIABLE FOR THE REASON THAT HONBLE GUJARAT HIGH COURT HAS ALREADY DIRE CTED THE REVENUE NOT TO DRAG THE ASSESSEE IN UNNECESSARY AVOIDABLE LITIGATION. 7.2.THE ISSUE REGARDING GRANT OF INTEREST TO THE ASSESSEES IS CLEARLY COVERED BY THE DECISION OF THE SPECIAL BENCH AS WELL AS HONBLE GUJARAT HIGH COURT WHICH HAVE NOT BEEN C ONTENDED TO BE REVERSED OR MODIFIED.THEREFORE, WE DIRECT THE REVENUE 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 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 DIRECTIONS OF HONBLE GUJARAT HIGH COURT (SUPRA), BUT KEEPING IN VIEW THAT NO SUCH REQUEST WAS MADE BY LD. AR, WE RESTRAIN OURSELVES TO AWARD SUCH COST. 8.NOW COMING TO GROUND NO.4, THIS ISSUE HAS NOW BEEN SETTLED BY HONBLE SUPREME COURT BY THE DECISION RELIED 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 ARE PARTLY ALLOWED IN THE MANNER AFORESAID. 4 . WE FURTHER FIND THAT ON 1.5.2015 THE TRIBUNAL HAD DECIDED 35 APPEALS OF THE SAME GROU P WHEREIN IDENTICAL GROUNDS WERE RAISED IN ITA 6792 6826/MUM/2013 AY 84 - 85. IN THAT MATTER THE ORDER OF THE TRIBUNAL DATED 25/3/20 15 WAS FOLLOWED.RESPECTFULLY FO LLOWING 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 REG ARDING GRANT OF INTEREST TO THE ASSESSEE IS COVERED BY THE H ON BLE C OURT. THEREFORE , AO IS DIRECTED TO GRANT INTEREST TO THE ASSESSEE . GROUND NOS . 2 AND 3 ARE ALLOWED IN FAVOUR OF THE ASSESSEE . FOLLOWING THE ORDER OF THE TRIBUNAL DT. 25. 0 3. 2015(SUPRA), WE DECIDE GR. NO.4 AGAINST THE ASSESSEE. 6090/M/13 FAMILY TRUST BOI GROUP 8 5. FOLLWING THE ABOVE ORDER FOR ITA/6090/MUM/2013,WE ALLOW 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 OPEN COURT ON 7 TH , SEPTEMBER ,2015. 7 , 2015 SD/ - SD/ - ( / SANJAY GARG ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 07 .0 9 .2015 . . . JV. SR.PS. / COPY OF THE ORDER FORWARD ED 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 , / I TAT, MUMBAI.