2022 (11) TMI 197 - AT - Income Tax

Addition for interest on FDR - HELD THAT - It is not in dispute that the assessee has received the interest only after passing of the order by the Hon ble High Court on 15/11/2016 and the assessee has offered the said amount for taxation in the Assessment Year 2016-17 2017-18. As per Section 5 of the Income Tax Act, the total income of the assessee in any previous year in case of resident includes all income from whatever sources derived which are received or deem to be received in the taxable territory of India. In the present case, assessee acquired the right to received income of Rs. 65,00,000/-after the passing of judgment dated 15/11/2016 by the Hon ble High Court and the same was subjected to tax in AY 2017-18. Such being the case, there cannot be taxation for the same amount in the year under consideration i.e. Assessment Year 2013-14, which amounts to double taxation . In view of the same, the addition made in the Assessment year 2013-14 deserves to be deleted. Accordingly, we allow Ground No. 1 of the Assessee. Credit of TDS u/s 199 - HELD THAT - The assessee offered the subject income for taxation in Assessment 2016-17 2017-18. As per Section 199 of the I.T Act, credit for tax deduction at source shall be given to the deductee for the assessment year for which such income is assessable. Therefore, with the above observations the Ground No. 2 deserves to be partly allowed and the assessee is entitled to get the TDS Credit as per Section 199.

Issues involved:
1. Addition of interest on FDR in Assessment Year 2013-14.
2. Credit for TDS deducted on interest income.

Analysis:
1. The appeal was filed against the order passed by the Ld.CIT(A) for Assessment Year 2013-14, where an addition of Rs. 11,89,532/- for interest on fixed deposits was made. The initial return filed by the assessee showed a loss of Rs. 62,324/-. The assessment order later added the interest earned on fixed deposits to the taxable income, totaling Rs. 76,27,208/-. The CIT(A) deleted the addition of Rs. 65,00,000/- made under section 68 but upheld the addition of interest on FDR.

2. The main contention of the assessee was that the interest income accrued after a High Court order in 2016 and was offered for taxation in Assessment Year 2016-17 and 2017-18. The assessee argued that the income did not accrue in Assessment Year 2013-14, and therefore, should not be taxed for double taxation. The Tribunal agreed, citing Section 5 of the Income Tax Act, which includes income received or deemed to be received in India. The Tribunal held that since the income was received after the High Court order, it should not be taxed in Assessment Year 2013-14, avoiding double taxation. Ground No. 1 of the Assessee was allowed, and the addition for interest on FDR was deleted.

3. Regarding Ground No. 2, the Tribunal noted that the assessee had offered the income for taxation in Assessment Years 2016-17 and 2017-18. As per Section 199 of the Income Tax Act, credit for TDS should be given to the deductee for the assessment year in which the income is assessable. Therefore, the Tribunal partly allowed Ground No. 2, ruling that the assessee is entitled to receive TDS credit as per the provisions of the Income Tax Act.

4. In conclusion, the appeal filed by the assessee was partly allowed, with the Tribunal ruling in favor of the assessee on the grounds related to the addition of interest on FDR and the credit for TDS deducted on the interest income. The judgment clarified the tax treatment of the interest income accrued post a High Court order and the entitlement of the assessee to TDS credit as per the relevant provisions of the Income Tax Act.

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