TMI Blog2001 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... ared by the assessee in the returns filed for the relevant assessment years with the Assessing Officer. K. Khodidas Patel Specific Family Trust has been held to be specific trust by the various orders of the Tribunal contained in the paper book filed by the Id. counsel during the course of hearing before us. The Tribunal, while deciding the appeals in the case of the main trust held that interest paid to the beneficiaries is deductible from income of the trust in view of the binding decision of the Jurisdictional High Court in the case of CIT v. Tanvi Sajni Family Trust [1994] 209 ITR 497. In the said decision the Gujarat High Court held that the trust was a distinct legal entity different from the beneficiaries and therefore it could not be said that after the money became payable to the beneficiaries, it could be treated by trust as its own money. Shri R.D. Shah, the ld. counsel for the assessee submitted that except for assessment year 1990-91, the interest received by the assessee beneficiary in the instant case for the various assessment years is liable to be assessed in his hands and may accordingly be treated as assessee's income. With regard to assessment year 1990-91 the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y dismissed. It is on the basis of the aforesaid facts that the ld. counsel pleads that for assessment year 1990-91 since interest paid to the beneficiary has been subject-matter of KVSS by the said trust, the interest received by the assessee as a beneficiary be hot subjected to tax on the ground that it would amount to double taxation. The contention of the ld. counsel is that interest received by the assessee beneficiary, disclosed in the income-tax return has been assessed by the Assessing Officer for assessment year 1990-91 on protective basis and on payment of disputed tax under the KVSS in the case of the trust, the protective assessment is liable to be cancelled. 7. We have given our thoughtful consideration to the facts of the case and the submissions made before us. At the very outset we may point out that K. Khodidas Patel Specific Family Trust has been held by the Tribunal to be a specific trust for various assessment years including for assessment year 1990-91. The trust has thus been held to be a distinct legal entity and different from its beneficiaries. The admitted facts are that the interest has been paid by the trust to the various beneficiaries including the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 183 shows that where Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is no doubt entitled to be relieved of it in accordance with law, but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the Assessing Officer (Income Tax Officer) has taxed the said income in the hands of another person contrary to law." In the present case the assessee beneficiary is a "right person" to be assessed in respect of the interest income received from the trust. The position has in fact been admitted and accepted by the assessee himself for the various assessment years except for assessment year 1990-91. We are unable to understand as to how the settled proposition, endorsed and approved by the Hon'ble Supreme Court as above can be brushed aside for the assessment year 1990-91. 8. Regarding the declaration made by the trust K. Khodidas Patel Specific Family Trust under the KVSS we have gone through the scheme introduced by the Finance (No. 2) Act, 1998. The Scheme is essentially a recovery scheme and not a litigation settlement scheme. The scheme makes an offer by the Government f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that once the declaration in a substantive case is accepted, the tax arrear in protective case would no longer valid. The contention of the assessee is that since the interest received by the assessee beneficiary from K. Khodidas Patel Specific Family Trust has been assessed by the Assessing Officer as a protective measure, the aforesaid clarification would help the assessee against including the interest income in his case. We are not impressed by the argument. It needs to be pointed out that the Assessing Officer, while making the assessment in the case of K. Khodidas Patel Specific Family Trust recorded a finding that the trust is a make belief affair and has been constituted by way of tax planning. The Assessing Officer invoked the Supreme Court decision in the case of McDowell Co. Ltd. v. CTO [1985] 154 ITR 148 in support of his conclusion that the trust has not been created for bona fide purposes of its beneficiaries. While recording this finding the Assessing Officer disallowed payment of interest to the beneficiaries treating the payment as to self. It was in the context of this assessment in the case of the trust that the Assessing Officer proceeded to assess the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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