TMI Blog2015 (8) TMI 704X X X X Extracts X X X X X X X X Extracts X X X X ..... ly we direct the AO to grant the said interest to the assessee. It may be clarified at this juncture that the earlier bunch of appeals decided by the Mumbai Benches of the Tribunal in M/s. Vaibhavi Discretionary Family Trust and others was in respect of the beneficiaries listed in Schedule-I whereas the present bench of appeals relate to beneficiaries listed in Schedule-II on account of deferred corpus where the right to receive the income comes after 18 years. Following the parity of reasoning of the orders of the different Benches of the Tribunal and also following the direction of the Hon'ble Gujarat High Court (supra) we allow the grounds of appeal raised by the assessee vis-a-vis grant of interest on refunds due under section 244(1)(a) of the Act. However, the assessee is not entitled to interest on interest in view of the ratio laid down by the Hon'ble Supreme Court in the case of CIT vs. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] - Decided partly in favour of assessee. - ITA No.7226, 7251, 7259, 7268, 7269, 7258, 7270, 7254, 7262, 7263, 7265, 7266, 7271, 7272, 7253, 7261, 7257, 7260, 7250, 7252, 7255, 7264, 7273, 7274, 7227, 7228, 7229, 7230, 7231, 72 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the assessee took us through the facts of the case and then also referred to the order of the Tribunal to plead that on identical facts the Tribunal held the assessee to be eligible for interest on refunds though the Tribunal dismissed the plea of the assessee with regard to interest on interest. It was fairly pointed out by the learned A.R. for the assessee that out of the list of beneficiaries of M/s. K. Kacharadas Patel Specific Family Trust having 0.5% deferred shares in the parent trust, i.e. the list of assessees being deferred corpus, however the issue was identical to other beneficiaries in Schedule-1. 6. The learned D.R. for the Revenue pointed out that no interest was allowable on interest. However, the learned D.R. did not controvert the claim of the learned A.R. for the assessee that the issue is covered by the order of the Tribunal on identical facts. 7. We have heard the rival submissions and carefully perused the record. Briefly, in the facts of the present case the assessee was deferred corpus and was beneficiary of M/s. K. Kachradas Patel Specific Family Trust deriving @5% accumulated beneficiary share, as per Schedule-II attached and forming part of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trust having 0.5% present share in parent Trust . The assessee Trust 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 ₹ 1,10,290/- of which taxes were paid at a sum of ₹ 51,580/-. The returned income was accepted vide order dated 27/2/1987 passed under 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 matter in further appeals. However, the main Trust namely K. Kachara Patel Specific Family Trust settled the dispute under KVSS. In view of this development, the income in the hands of this present Trusts were deleted by the AO under section 16(5) of the Act vide order dated 28/11/2000 passed under section 155 of the Act and income of these assessees were computed at Nil. The AO allowed the refund as under: Total taxes paid ₹ 51,580/- Less: Refunded vide order dt. 29/2/88 ₹ 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases before Special 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 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 dispute 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 and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 double 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 same income more than once. This must be made very clear. 31. What are the simple facts available in these cases? The incomes of the main Main Trust have been distributed 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 accepted by the assessee, what would be the Position of the corresponding protective assessments made in the hands of the beneficiary trusts? The protecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 selfassessment . 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 tax 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 interest 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 11/2/2010 pages 111 of the paper book. (4) Notice of demand under section 156 granting interest of ₹ 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. 10. The Tribunal further referred to the submissions of the learned D.R. on the said issue, which are incorporated in paras 5 6 of the order which reads as under: - 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 according to the facts of the case it cannot be said that refund is due to the assessee as a result of any amount hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Hon ble Gujarat High Court and Gujarat High Court has not only upheld the decision of Special Bench on the issue regarding grant of interest but Hon ble 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 Hon ble Gujarat High Court are parimateria and this fact was not disputed by the Revenue. The AO has adopted a view which is contrary to the decision of Special Bench and the decision of the Hon ble Gujarat High Court and as he has again made the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was entitled to get the refund. In the facts of the case before the Special Bench the AO had initially granted interest under section 244(1)(a) of the Act to the assessee which was withdrawn by the CIT(A) under section 263 of the Act and the Tribunal held that interest was rightly granted. The relevant findings of the Special Bench have been reproduced by us in the paras herein above. The said order of the Special Bench was upheld by the Hon'ble Gujarat High Court in IT Appeal No. 1514 to 1797 of 2006 in the case of Punitaben K. Patel OSDFT and Others (284 cases) and Manjulaben Pramodbhai Patel and Others (64 cases) dated 26.06.2008 (copy paced at pages 68 to 100 of the paper book). The Hon'ble High Court held that the assessee was entitled to grant of interest on refunds as held by the Special Bench of the Tribunal. The said order of the Hon'ble Gujarat High Court has not been reversed by the higher forum and nothing to that extent was pointed by any of the Authorised Representatives. Further, in the case of M/s. Vaibhavi Discretionary Family Trust the matter was restored by the CIT(A) to the file of the AO to allow interest as per law and the AO, vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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