TaxTMI 
TaxTMI 
2015 (8) TMI 704
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....he Act. 2. All the appeals relating to different assessees on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts in the case of ITA No. 7226/Mum/2013. 3. The grounds of appeal raised by the assessee in ITA No. 7226/Mum/ 2013 reads as under: - "1) In laws 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 laws and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in holding that the appellant is not entitled to interest on refund of Rs. 40,442/-. 3) In laws and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in holding that appellant is not eligible for interest on refund of Rs. 11,138/-. 4) In laws and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in holding that appellant is not eligible for interest on interest." 4. The issue raised in the present appeal is against the allowability of interest on refunds due and paid to the assessee. The assessee has also raised gro....
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....der which he deleted the income which was protectively assessed in the hands of the assessee since substantive addition was made in the hands of the trust. Thereafter the AO granted refund of tax to the assessee as under: - Total taxes paid Rs. 51,580/- Less: Refunded vide order dt. 29/2/88 Rs. 40,442/- Balance refund due Rs. 11,138/- 8. Consequent to the said order passed under section 155(2) of the Act, the assessee moved an application under section 154 of the Act requesting interest on refund of Rs. 40,442/- till 29.02.1988 and interest on refund of Rs. 11,138/- till 28.11.2000. On advance tax, assessee sought interest from 01.04.1984 and on self-assessment tax assessee sought interest from the date of payment, i.e. June, 1984. Further claim was made for issue of compensatory interest. The AO, vide order passed under section 154/155 of the Act dated 02.12.2012 rejected the claim of the assessee which was confirmed by the CIT(A). The assessee is in appeal against the said order of the CIT(A). 9. We find that the Tribunal, in the bunch of appeals with lead order in the case of Vaibhavi Discretionary Family Trust in ITA No. 6298/Mum/2013 relating to assessment year 1984-8....
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....and as per said computation a refund of Rs. 40,442/- was granted vide order dated 29/02/1988 and balance amount of Rs. 11,138/- was refunded to the assessee. The assessee is seeking interest on the aforementioned refund of 40,442/- upto the date 29/2/1988 and for a sum of Rs. 11,138/- upto 28/11/2000. 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, 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 Bench 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 t....
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....and raised in that 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 becomes 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 hands 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 twice. 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 pending 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. Whethe....
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....gh Court in the case of Saurashtra Cement & Chemical Industries vs. ITO 194 PER 659. In that case there was no assessment at all and the question of refund was considered in that perspective 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 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 wh....
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.... 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 Lordships on grant of interest our attention was invited to the following observations: "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 Special Bench of Tribunal. We repeat that revenue should not drag the respondents to unnecessary avoidable litigation." 3.6 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 ....
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....ed 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." 11. The Tribunal, on consideration of the issues held as under: "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. 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 assesses benefit of interest which was already....
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....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." 12. The issue arising in the present appeal before us is identical to the issue before the Tribunal. A perusal of the factual aspects of the said case reflects that even the amount of taxes paid and the dates of refunds issued to the assessee are same, i.e. out of total taxes of Rs. 51,580/- the first adjustment was made vide order dated 29.02.1988 and the balance refund was issued to the assessee on 07.12.2000. The said amount had become due to the assessee in view of the substantive assessment of income in the hands of the main trust. In view thereof the assessee was entitled to interest on the said refunds under the provisions of section 244(1)(a) of the Act. As referred to by the Tribunal, similar issue arose before the Special Bench in the case of Punitaben Karsanbhai Patel Oral Specific Deferred Family Trust in ITA No. 2157/Mum/2003 & others, and vide order dated 07.07.2006 (copy of which is placed on pages 37 to 66 of the paper book) it was held that the assessee was entitled to get the refund. In the facts o....