Binding precedent and section 41(1) limit taxation of fixed deposit interest and credited sums where no prior deduction was allowed.

Interest on fixed deposits was held not assessable as income where the identical issue had already been decided in the assessee's own case and binding precedent was followed. Amounts credited in the profit and loss account were also not taxable under section 41(1) because the assessee had not earlier claimed or obtained any deduction or allowance in respect of those sums. The referred questions were answered in favour of the assessee, and the Revenue's challenge failed.

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Issues: (i) Whether interest on fixed deposits was assessable as income of the assessee. (ii) Whether sums credited in the profit and loss account could be brought to tax under section 41(1) of the Income-tax Act, 1961.

Issue (i): Whether interest on fixed deposits was assessable as income of the assessee.

Analysis: The answer was governed by the earlier decision rendered in the assessee's own case, which had already concluded the identical issue.

Conclusion: The question was answered in favour of the assessee and against the Revenue.

Issue (ii): Whether sums credited in the profit and loss account could be brought to tax under section 41(1) of the Income-tax Act, 1961.

Analysis: The assessee had not claimed any deduction in respect of those sums, and without such a prior allowance the provision could not be invoked on the facts of the case.

Conclusion: The question was answered in favour of the assessee and against the Revenue.

Final Conclusion: All the referred questions were answered in favour of the assessee, and the Revenue's challenge failed.

Ratio Decidendi: Where an issue is already concluded by binding precedent in the assessee's own case, it is to be followed; and section 41(1) applies only where the assessee had obtained a prior deduction or allowance in respect of the relevant sum.

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