TMI Blog2015 (10) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the case of CIT vs. Gujarat Flouro Chemicals (2013 (10) TMI 117 - SUPREME COURT) - Decided in favour of assessee in part. - 6090, 6091, 6092, 6093, 6094, 6095, 6096, 6097, 6098, 6099, 6100, 6101, 6102, 6103, 6104, 6105, 6106, 6107, 6108, 6109, 6110, 6111, 6112, 6113, 6114, 6115, 6116, 6117, 6118, 6119, 6120, 6121, 6122, 6123, 6124/Mum/20 - - - Dated:- 7-9-2015 - Sh. Rajendra,Accountant Member Sanjay Garg,Judicial Member For The Assessee : Shri Himanshu Shah For The Revenue : Smt.Vinita J Menon 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 identical and read as under: 1)In law and in facts and circumstances of the Appellant s 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 Appellant s case, the learned CIT(A) has grossly erred in holding that appellant is not entitled to interest on refund of ₹ 40,442/-. 3) In law and in facts and circumstances of the Appellant s case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and the balance amount of ₹ 11,138/- was refunded to the assessee.It asked the AO to grant interest on the aforementioned refund of ₹ 40,442/- till 29.02.1988 and for a sum of ₹ 11,138/- till 28.11.2000.But,the AO rejected the application filed 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 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 the Hon ble Gujarat High Court had upheld the order of the Special Bench on 26.06.2008 in IT appeal Nos.1514 to 1795of 2006(Punitaben K.Patel OSFDT and 284 other cases),Nos.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 Hon ble High Court observed as under : As regards grant of interest on refund, we find that Tribunal was justified in holding that refund should be granted with interest. We are in full agreement with the order of the Special B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the controversy 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 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 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 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 trusts would fade away and the demand raised in those protective assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 intervention 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 reliance placed by the learned standing counsel on the decision of the Gujarat High Court in the case of Saurasht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees. 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 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 interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reference 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 Hon ble 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 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 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, 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 assessee s 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 Hon ble 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 Hon ble 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 group wherein identical grounds were raised in ITA 6792 6826/Mum/2013 AY 84-85. In that matter the order of the Tribunal dated 25/3/2015 was followed.Respectfully following the above,we hold that the conduct of the Assessing Officer(AO)is against the decision of the Special Bench and Hon'ble Gujarat High Court,that the issue regarding grant of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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