2015 (11) TMI 112 - AT - Income Tax

Eligibility for interest on refund - Held that - AS decided in Vaibhavi Discretionary case 2015 (4) TMI 3 - ITAT MUMBAI no substance in the argument of the Revenue that the delay in 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 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. Therefore, Assessing Officer is directed to pay interest on refund of ₹ 40,442/- till 29.02.1988 and interest on refund of ₹ 11,138/- till 28.11.2000 as prayed. - Decided in favour of assessee.

Summary

Issues:
Entitlement to interest on refund of Rs. 40,442, eligibility for interest on refund of Rs. 11,138.

Analysis:
The judgment dealt with multiple appeals by different assessees of the same group, arising from orders of CIT(A)-23, Mumbai, on similar issues. The primary issue in ITA No. 6277/Mum/2013 for A.Y. 1984-85 was the entitlement to interest on a refund of Rs. 40,442. The assessee, a beneficiary trust, had filed its return showing total income of Rs. 1,10,290 and paid taxes of Rs. 51,580. The income was protectively assessed as the main trust was disputing the matter. The Assessing Officer later deleted the income, resulting in a refund of Rs. 11,138. The assessee sought interest on the refund and filed a rectification application, which was rejected by the Assessing Officer. The CIT(A) dismissed the appeal on a technical point, stating that the refund had been computed and was payable to the assessee. However, the authorized representative argued that the assessee was entitled to interest on the refund based on precedents, including a case involving a similarly placed trust. The Tribunal, following the reasoning of the Special Bench and the Gujarat High Court, directed the Assessing Officer to pay interest on the refund amounts.

In a similar vein, multiple appeals by other assessees were allowed based on the same reasoning applied in the main case. The Tribunal directed the Assessing Officer to grant relief to all assessees in line with the decision in the primary appeal. The judgment emphasized the consistent application of legal principles across similar cases and the obligation of the Revenue to comply with established precedents. The decision highlighted the importance of following judicial directives and avoiding unnecessary litigation, as underscored by the Gujarat High Court's admonition to the Revenue. The Tribunal's ruling underscored the need for adherence to legal precedents and the fair treatment of taxpayers in matters of interest on refunds. The judgment concluded by allowing all appeals filed by the assessees, ensuring consistency and fairness in the treatment of similar cases.