Receipt-basis taxation of securities interest applies for the correct assessment year, but double taxation must still be corrected.

Interest on securities under section 8 of the 1922 Act was treated as taxable on receipt basis, so interest actually received in the previous year was correctly brought to tax in assessment year 1961-62. The fact that the same income had also been assessed in earlier years did not justify deleting the proper assessment for the year of receipt, because the key question was the legally correct assessment year. However, the same amount could not remain taxed twice, so relief had to be given to remove the duplication and prevent double taxation.

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Issues: Whether interest on securities was taxable under section 8 of the 1922 Act on receipt basis in assessment year 1961-62, and whether the same amount could be excluded because it had been taxed in earlier years.

Analysis: Section 8 of the Indian Income-tax Act, 1922, governed income from securities and taxable interest was the interest receivable by the assessee, which, on the authorities followed, meant interest actually received. The Court held that the sum of Rs. 30,819 was therefore assessable in the previous year of receipt and rightly included in assessment year 1961-62. The fact that the department had also taxed the same income in earlier years did not justify deleting the correct assessment, because the real issue was which assessment year was legally proper. At the same time, the Court recognised that the same income could not be retained in both sets of assessments and that appropriate relief had to be granted against double taxation.

Conclusion: The amount was correctly brought to tax on receipt basis in assessment year 1961-62. The assessee's challenge failed on the merits, but the department was obliged to remove the duplication and afford relief for the earlier assessments.

Ratio Decidendi: Where interest on securities is chargeable under section 8 of the 1922 Act, it is taxable on receipt basis in the year of receipt, and a taxpayer cannot be made to suffer double taxation of the same income in different assessment years.

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