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

ITA 6285/MUM/2013

• Counselvise Citation: 628519914 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 1984-1985
• Appeal Filed On: 29-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KETAN M MAMANIA
• Keywords: Revision of order
• Section: 263; 143(3); 244A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI . . , . . , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER . / ITA NO. 6285/MUM/2013 / ASSESSMENT YEAR 1984-85 HANUMAN DISCRETIONARY FAMILY TRUST, C/O.SEVANTILAL N. SHAH & CO. 28, DALAMAL CHAMBERS, 2 ND FLOOR, 17, NEW MARINE LINES, MUMBAI 400 020 / VS. INCOME TAX OFFICER 12(2)(1), MUMBAI. ./ ./ PAN/GIR NO. : AABTH1075M ( / APPELLANT ) .. ( ! / RESPONDENT ) . / ITA NO. 6293/MUM/2013 / ASSESSMENT YEAR 1984-85 HARIAR DISCRETIONARY FAMILY TRUST, C/O.SEVANTILAL N. SHAH & CO. 28, DALAMAL CHAMBERS, 2 ND FLOOR, 17, NEW MARINE LINES, MUMBAI 400 020 / VS. INCOME TAX OFFICER 12(2)(1), MUMBAI. ./ ./ PAN/GIR NO. : AABTH1074L ( / APPELLANT ) .. ( ! / RESPONDENT ) APPELLANTS BY SHRI KETAN M. MAMANIA RESPONDENT BY : SHRI JITENDRA KUMAR / MRS.VIDISHA KALRA $ % & / DATE OF HEARING : 27/04/2015 $ % & / DATE OF PRONOUNCEMENT : 27/04/2015 . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 2 / O R D E R PER I.P.BANSAL, JM: THESE APPEALS ARE RELATED TO GROUP CASES AND THES E ARE DIRECTED AGAINST CONSOLIDATED ORDER PASSED BY LD. CIT(A) DATED 29/08 /2013 IN RESPECT OF 54 GROUP CASES. IT MAY BE MENTIONED HERE THAT THE ASS ESSEES IN THE PRESENT APPEALS ARE ALSO PART OF THE SAID GROUP, WHICH HAS BEEN DECIDED BY LD. CIT(A) EARLIER AND OUT OF 54 GROUP CASES 31 APPEALS WERE D ECIDED BY THE TRIBUNAL VIDE ORDER DATED 25/3/2015, COPY OF WHICH HAS BEEN PLAC ED BEFORE US AND ALSO GIVEN TO LD. DR. GROUNDS OF APPEAL ARE IDENTICAL A S TAKEN IN THE SAID ORDER, WHICH READ AS UNDER: 1) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN THE POINTS OF L AW 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 ENTITLED TO INTEREST ON REFUND OF RS.40,442/-. 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 ELIGIBLE FOR INTEREST ON REFUND OF RS.L1,138/-. 4) 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 ELIGIBLE FOR INTEREST ON INTEREST. 2. GROUND NO.4 WAS NOT PRESSED DURING THE COURSE OF HEARING. THUS, IT WAS THE CONTENTION OF LD. AR THAT SIMILAR ORDER MAY BE PASSED IN RESPECT OF THESE TWO ASSESSEES. 3. LD. DR DID NOT CONTEST TO THE SUBMISSIONS OF THE ASSESSEE THAT THESE ASSESSEES ARE PART OF THE GROUP CASES DECIDED BY LD . CIT(A) AND OUT OF 54 GROUP . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 3 CASES 31 CASES WERE EARLIER DECIDED BY THE TRIBUNA L VIDE AFOREMENTIONED ORDER DATED 25/3/2015. 4. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, FOLLOWING THE AFOREMENTIONED ORDER OF TRIBUNAL DATED 25/03/2015, WE PASS SIMILAR ORDER. WE MAY MENTION HERE THAT ONE OF US (JM) IS PARTY TO THE SAID DECISION. FOR THE SAKE OF COMPLETENESS OF FACTS THE SAID ORDER IS REPRODUCED BELOW IN ITS ENTIRETY. ALL THESE APPEALS ARE FILED BY THE RESPECTIVE ASS ESSEES AND THEY ARE DIRECTED AGAINST A CONSOLIDATED ORDER 29/08/2013 PASSED BY LD. CIT(A) -23 MUMBAI IN RESPECT OF ASSESSMENT YEAR 1984-85. GROUNDS OF APPEAL IN ALL THESE APPEALS AR E IDENTICAL AND READ AS UNDER: 1) IN LAW AND IN FACTS AND CIRCUMSTANCES OF THE APP ELLANTS 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.40,442/-. 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.L 1,138/-. 4) 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. 2. IT MAY BE MENTIONED HERE THAT WHILE ARGUING THE APPEAL THE FACTS WERE ARGUED FROM ITA NO.6298/MUM/2013 AND IT WAS SUBMITTED THAT FACTS AR E IDENTICAL IN RESPECT OF EACH OF THE APPEAL AND DECISION TAKEN ON THE FACTS OF THIS CASE CAN BE MADE APPLICABLE TO OTHER APPEALS. 3. BRIEFLY STATED THE FACTS ARE AS UNDER: THE ASSESSEES ARE BENEFICIARY OF K. KACHARADAS PAT EL SPECIFIC FAMILY TRUST HAVING 0.5% PRESENT SHARE IN PARENT TRUST. THE ASSESSEE TRU ST ALSO DERIVED 0.5% DEFERRED SHARE. FOR ASSESSMENT YEAR 1984-85 RETURN WAS FILED WITH ITO, A-1, MUMBAI ON 23/6/1984 SHOWING TOTAL INCOME OF RS.1,10,290/- OF WHICH TAXES WERE PAID AT A SUM OF RS.51,580/-. THE RETURNED INCOME WAS ACCEPTED VIDE ORDER DATED 27/2/1987 PASSED UNDE R SECTION 143(3) OF THE INCOME TAX ACT, 1961(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 NAMELY K. KACHARA PATEL SPECIFIC FAMILY TRUST. THE MAIN TRUST WAS AGITATING THE MAT TER IN FURTHER APPEALS. HOWEVER, THE MAIN TRUST NAMELY K. KACHARA PATEL SPECIFIC FAMILY TRUS T SETTLED THE DISPUTE UNDER KVSS. IN VIEW OF THIS DEVELOPMENT, THE INCOME IN THE HANDS OF THIS P RESENT TRUSTS WERE DELETED BY THE AO UNDER SECTION 16(5) OF THE ACT VIDE ORDER DATED 28/11/200 0 PASSED UNDER SECTION 155 OF THE ACT AND INCOME OF THESE ASSESSEES WERE COMPUTED AT NIL. T HE 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 DUE RS. 11,138/- THE ASSESSING OFFICER ALLOWED REFUND OF RS.11,138/- AS PER THE ABOVE CALCULATION . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 4 THE ASSESSEE SUBMITTED RECTIFICATION APPLICATION DA TED 7/12/2000 SEEKING FOLLOWING REFUND: 1) REFUND OF RS.40,442/-, ALLEGEDLY TRANSFERRED I N THE CASE OF MAIN TRUST ALONGWITH DUE INTEREST. 2) INTEREST ON REFUND AS ALSO INTEREST ON INTEREST . 3.1 THE ASSESSEE FILED RECTIFICATION APPLICATION DA TED 5/10/2012 FOR INTEREST ON REFUND UNDER SECTION 244A OF THE ACT TILL THE DATE OF REFUND, WHICH HAS BEEN DENIED TO THE ASSESSEE BY AO AND ALSO BY LD. CIT(A). THE ASSESSEE IS AGGRIEVED, HENCE, HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 3.2 FOR THE SAKE OF COMPLETENESS OF THE FACTS IT MA Y BE MENTIONED HERE THAT ASSESSEE HAS PAID ADVANCE TAX OF RS.31,780/- AND SELF ASSESSMENT TAX OF RS.19,800/-. THE TOTAL AMOUNT OF TAX PAID BY THE ASSESSEE IS A SUM OF RS.51,580/-. AS PER INCOME TAX COMPUTATION FORM DATED 28/11/2000, COPY OF WHICH HAS BEEN FILED AT PAGES 1 0 TO 11 OF THE PAPER BOOK. IT IS 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 VIDE ORDER DATED 29/02/1 988 AND BALANCE AMOUNT OF RS.11,138/- WAS REFUNDED TO THE ASSESSEE. THE ASSESSEE IS SEE KING INTEREST ON THE AFOREMENTIONED REFUND OF 40,442/- UPTO THE DATE 29/2/1988 AND FOR A SUM OF R S.11,138/- UPTO 28/11/2000. 3.3 IT IS UNDISPUTED FACT THAT IN VIEW OF THE SUB STANTIAL 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 PROVISION S OF SECTION 244(1A) OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT ON SIMILAR FACTS AND CIRCUMSTANCE S IN THE CASES OF OTHER BENEFICIARIES THERE IS DECISION OF SPECIAL BENCH, 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 BE NCH THAT THE BENEFICIARIES ARE ENTITLED TO GET THE INTEREST. THE SPECIAL BENCH WHILE DECIDING THI S ISSUE IN FAVOUR OF THE ASSESSEE HAS CONSIDERED THE PROVISIONS OF KVSS 1998 AND AFTER CO NSIDERING THOSE PROVISIONS IT WAS HELD THAT INTEREST WAS RIGHTLY GRANTED TO THE ASSESSEE. IN T HE CASES BEFORE SPPECIAL BENCH INITIALLY SUCH INTEREST 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 W AS 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, A PPEAL AND REVISION ORDERS. 28. THE FIRST ISSUE THAT CAME UP FOR CONSIDERATION IS WHETHER THE DISPUTE REGARDING THE ISSUE INVOLVED IN THESE APPEALS WERE CONTINUED TO E XIST 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 CONTROVERS Y CONTINUED AND EXISTED AT THAT POINT OF TIME AND THERE IS NO DOUBT THAT THE ISSUE WAS PE NDING BEFORE THE HIGH COURT IN REFERENCE JURISDICTION. THEREFORE, TO MAKE THE MATT ER CLEAR , WE STATE THAT THE COMMISSIONER OF INCOME-TAX WAS NOT CORRECT IN HOLDI NG THAT SUCH A CONTROVERSY DID NOT EXIST. 29. WE FURTHER FIND THAT THE ANSWER TO THE CONTROVE RSY CROPPED UP IN THESE CASES IS AVAILABLE IN THE RELEVANT INSTRUCTIONS ISSUED BY TH E CBDJ IN THE CONTEXT OF KAR VIVAD SAMADHAN SCHEME, 1998. WE HAVE ALREADY SEEN THE REL EVANT 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 C LARIFIED THAT 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 RE CTIFIED BY SUITABLE ORDERS IN THE NORMAL . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 5 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. TH EY 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 PROTE CTIVE ASSESSMENTS MADE IN THE HANDS OF BENEFICIAL TRUSTS WOULD FADE AWAY AND THE DEMAND R AISED IN THOSE PROTECTIVE ASSESSMENT WOULD NO LONGER BE VALID. WHEN THE ASSESSMENT IS N OT SUBSISTING AND THE DEMAND IS NOT VALID, THE AMOUNT PAID BY THE ASSESSEE ALONG WITH T HE RETURN SUBJECT TO PROTECTIVE ASSESSMENT BECOMES REFUNDABLE TO THE ASSESSEE. THE REFORE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS RIGHTLY ACCE PTED THE PRAYERS OF THE ASSESSEES AND PASSED APPROPRIATE ORDERS EXCLUDING THE INCOMES W HICH HAVE ALREADY BEEN CONSIDERED IN THE HANDS OF THE MAIN TRUSTS UNDER KVSS. THEREF ORE, OBVIOUSLY, THE ASSESSING OFFICER IS JUSTIFIED IN FOLLOWING THE CONSEQUENTIAL PROCEDU RE 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 S AME 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 PENDING LITIGATIONS AT DIFFERENT LEVELS AND COLLECT THE T AX 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 THE INCOME-TAX ACT OR UNDER THE SCHEME OF KVSS WHAT IS TO BE ASSES SED AND SUBJECTED TO TAX IS THE REAL INCOME ONCE FOR ALL. KVSS DOES NOT CREATE ANY ARTIF ICIALITY. A CASE OF DOUBLE TAXATION OF THE SAME INCOME CANNOT BE ENDORSED UNDER THE KVSS. IN O THER WORDS, THE KAR VIVAD SAMADHAN SCHEME, 1998 DOES NOT EMPOWER THE INCOME-T AX DEPARTMENT TO TAX THE SAME INCOME MORE THAN ONCE. THIS MUST BE MADE VERY CLEAR . 31. WHAT ARE THE SIMPLE FACTS AVAILABLE IN THESE C ASES? THE INCOMES OF THE MAIN MAIN TRUST HAVE BEEN DISTRIBUTED TO THE BENEFICIAR Y TRUSTS. THE BENEFICIARY TRUSTS HAVE FILED RETURNS IN THEIR INDIVIDUAL HANDS. THIS POSI TION WAS NOT ACCEPTED BY THE REVENUE. THEREFORE, SUBSTANTIVE ASSESSMENTS HAVE BEEN MADE IN THE HANDS OF MAIN TRUSTS. IN ABUNDANT PRECAUTION PROTECTIVE ASSESSMENTS HAVE BEE N MADE IN THE HANDS OF THE RESPECTIVE BENEFICIARY TRUSTS. SUPPOSE THE PROPOSI TION MADE OUT BY THE DEPARTMENT WAS ACCEPTABLE TO THE ASSESSEE AND THE SUBSTANTIVE ASS ESSMENTS MADE IN THE HANDS OF THE MAIN TRUSTS HAVE BEEN ACCEPTED BY THE ASSESSEE, WHA T WOULD BE THE POSITION OF THE CORRESPONDING PROTECTIVE ASSESSMENTS MADE IN THE H ANDS OF THE BENEFICIARY TRUSTS? THE PROTECTIVE ASSESSMENTS WOULD HAVE BECOME INVALID A S A RESULT OF WHICH THE REVENUE WOULD REFUND THE AMOUNT OF TAX IF ANY PAID BY THE B ENEFICIARY TRUSTS WHILE FILING THE RETURNS OF INCOME IN THEIR INDIVIDUAL CAPACITIES. T HERE 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 TRUS TS HAVE SETTLED THEIR SUBSTANTIVE ASSESSMENTS UNDER KVSS WHICH FOR ALL PRACTICAL PURP OSES IS EQUIVALENT TO FINALLY SETTLING THE SUBSTANTIVE ASSESSMENTS IN THEIR HANDS. THE FIN AL OUTCOME OF THE WHOLE PROCESS IS NOT DIFFERENT FROM THE SUBSTANTIVE ASSESSMENTS HAVING B EEN ACCEPTED BY THE ASSESSEES AS SUCH OR HAVING BEEN SETTLED UNDER AN AVAILABLE SCHE ME KNOWN AS KAR VIVAD SAMADHAN SCHEME, 1995. IN EITHER CASE THE PROTECTIVE ASSESSM ENTS BECOME INVALID WHEREBY NO DEMAND CAN BE ENFORCED AGAINST THOSE PROTECTIVE ASS ESSMENTS. 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 REFUN DED TO THEM. 32. WE DO NOT FIND MUCH FORCE ON THE RELIANCE PLACE D BY THE LEARNED STANDING COUNSEL ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 6 INDUSTRIES VS. ITO 194 PER 659. IN THAT CASE THERE WAS NO ASSESSMENT AT ALL AND THE QUESTION OF REFUND WAS CONSIDERED IN THAT PERSPECTI VE WHICH IS QUITE DIFFERENT FROM THE PRESENT CASE. THE INCOME INVOLVED IN THE SUBSTANTIV E ASSESSMENT AS WELL AS IN THE PROTECTIVE ASSESSMENTS ARE ONE AND THE SAME. THE IN COME HAS BEEN ASSESSED SUBSTANTIVELY IN THE HANDS OF THE MAIN TRUSTS AND THE DEMAND 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 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 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. THI S IS CALLED SELF-ASSESSMENT. WHEN AN ASSESSEE FILES A RETURN WITH POSITIVE INCOME AND RE MITS 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 RET URN IS NOT TAXABLE THE TAX PAID BY THE ASSESSEE IN PURSUANCE OF THAT RETURN HAS TO BE RETU RNED BY THE REVENUE. THEREFORE, REFUND OF TAX IS A MUST IN THIS CASE. THE PROPOSITI ON MADE BY THE CIT AGAINST THE REFUND OF TAX IS NOT PROPER. 33. REGARDING THE GRANT OF INTEREST ALSO, THE POSIT ION 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 INTEREST IS COMPENSATORY IN NATURE. IT ALWAYS MOVES WITH THE PRINCIPLE AMOU NT. 34. THERE IS NO SUBSTANCE IN THE ARGUMENT OF THE RE VENUE 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 IND IVIDUAL RETURNS OF INCOME DISCLOSING THE BENEFITS RECEIVED FROM THE MAIN TRUSTS ALSO. BUT W HEN 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. THEREFORE, IT IS ONLY WHEN KVSS WAS PROMULG ATED, 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 ASS ESSEES. 35. THEREFORE, WE ALSO FIND THAT THE ASSESSING OFFI CER HAS RIGHTLY GRANTED INTEREST TO THE ASSESSEES ON REFUNDS DUE TO THEM. 3.4 IT IS ALSO THE CASE OF THE ASSESSEE THAT THE SA ID ORDER OF THE SPECIAL BENCH HAS BEEN UPHELD BY HONBLE GUJARAT HIGH COURT AND REFERENCE WAS MADE TO THE DECISION DATED 26/6/2008 IN I.T APPEALS NOS. PUNITBEN K. PATEL OSFDT AND OTH ERS 284 CASES TAX APPEAL NOS. 1514 TO 1797 OF 2006, MANJULABEN PRAMODBHAI PATEL AND OTH ERS, 64 CASES, TAX APPEAL NOS. 573 TO 618 AND 1216 TO 1233 OF 2007 AND JANAK PRAMODBHAI PATEL AND OTHERS 6 CASES, TAX APPEAL NOS. 182 & 204 OF 2002 WITH TAX APPEAL NOS. 27 OF 30 OF 2004. COPY OF THIS ORDER IS FILED AT PAGES 64 TO 96 OF THE PAPER BOOK. 3.5 SO FAR AS IT RELATES TO FINDINGS OF THEIR LORDS HIPS ON GRANT OF INTEREST OUR ATTENTION WAS INVITED TO THE FOLLOWING OBSERVATIONS: . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 7 AS REGARDS GRANT OF INTEREST ON REFUND, WE FIND TH AT TRIBUNAL WAS JUSTIFIED IN HOLDING THAT REFUND SHOULD BE GRANTED WITH INTEREST. WE ARE IN FULL AGREEMENT WITH THE ORDER OF SPECIAL BENCH OF TRIBUNAL. WE REPEAT THAT REVENUE SHOULD NOT DRAG THE RESPONDENTS TO UNNECESS ARY AVOIDABLE LITIGATION. 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 TO THE PAPERS FILED IN THE PAPER BOOK AS FOLLOWS: (1) RECTIFICATION APPLICATION OF THE ASSESSEE FROM PG S. 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 INTERE ST 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 SUBM ITTED 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 RECEIVIN G 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 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 THE A SSESSEE AS A RESULT OF ANY AMOUNT HAVING NOT BEEN PAID IN PURSUANCE OF ANY ORDER OF ASSESSMENT S INCE, 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 DI D 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 O WN 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 ASSESSMENT 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 INDUSTRIES LTD. V S. 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 REFERENCE TO ASSESSED TAX DETERMINED ON REGULAR ASS ESSMENT AND FURTHER NO INTEREST CAN BE CLAIMED UNDER SECTION 214 BEYOND THE DATE OF REGULA R ASSESSMENT. IN THIS MANNER LD. DR PLEADED THAT INTEREST HAS RIGHTLY BEEN DENIED BY L D. CIT(A). 6. SO FAR AS IT RELATES TO GROUND NO.4, IT WAS SUBM ITTED BY LD. DR THAT ACCORDING TO DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. GUJ ARAT FLOURO CHEMICALS, 358 ITR 291 (SC) W.E.F. 1/4/1989 THE INTEREST WHICH CAN BE GRANTED T O 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 . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 8 BE PROVIDED. THUS, IT WAS PLEADED BY LD. DR THAT T HERE IS NO PROVISION ACCORDING TO WHICH ASSESSEE CAN BE GRANTED INTEREST ON INTEREST. 7. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. IN THE PRESENT CASES ASSESSEES ARE COMMON TO THE ASSES SEES 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 HONBLE H IGH 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 LITIGATION FOR NON-GRANTING OF THE INTEREST. THE RELEVANT OBSERVATIONS OF THEIR LORDSHIPS OF GUJARAT HIGH COU RT 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 THI S FACT WAS NOT DISPUTED BY THE REVENUE. THE AO HAS ADOPTED A VIEW WHICH IS CONTRARY TO THE DEC ISION 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 ASSESSEE. THUS, T HE CONDUCT OF THE AO IS AGAINST THE DECISION RENDERED BY SPECIAL BENCH. SIMILARLY, LD. CIT(A) H AS DISREGARDED THE SPECIAL BENCH BY SIMPLY HOLDING THAT THE SAME WOULD NOT BE APPLICABLE. A CCORDING TO LD. CIT(A) THE SAID ORDER WAS IN RESPECT OF SECTION 244A. WE DONT FIND ANY JUSTIF ICATION IN SUCH DISREGARD SHOWN BY LD. CIT(A). THEREFORE, IN THE FACTS & CIRCUMSTANCES OF THE CASE , SUCH CONDUCT OF THE REVENUE IS NEITHER ACCORDING TO THE ACCEPTED POSITION OF LAW SETTLED B Y THE HIGHER JUDICIAL FORUMS NOR IT IS APPRECIABLE FOR THE REASON THAT HONBLE GUJARAT HIG H COURT HAS ALREADY DIRECTED THE REVENUE NOT TO DRAG THE ASSESSEE IN UNNECESSARY AVOIDABLE LITIG ATION. 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 HIG H COURT WHICH HAVE NOT BEEN CONTENDED TO BE REVERSED OR MODIFIED. THEREFORE, WE DIRECT THE RE VENUE 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 IMPOS ED 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 OURSEL VES 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. . / ITA NO. 6285&6293/MUM/2013 / ASSESSMENT YEAR 1984-85 9 5. FOLLOWING THE AFOREMENTIONED ORDER APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2015 $ , - . 27/04/2015 $ SD/- SD/- ( . . / B.R.BASKARAN ) . . /I.P.BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; - DATED 27/04/2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. 0% ( ) / THE CIT(A)- 4. 0% / CIT 5. 1 %23 , & 23 , / DR, ITAT, MUMBAI 6. 4 / GUARD FILE. / BY ORDER, ! 1% % //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS