2022 (11) TMI 197 - AT - Income Tax

Tribunal partially allows appeal, deletes interest on fixed deposits post-High Court order, grants TDS credit.

The appeal was partly allowed by the Tribunal. The addition of interest on fixed deposits was deleted, as the income accrued post a High Court order and ... Income from other sources - taxable territory receipt rule under Section 5 of the Income-tax Act - time of accrual/receipt determining previous year - double taxation - TDS credit under Section 199 of the Income-tax Act - assessment year for which income is assessableIncome from other sources - taxable territory receipt rule under Section 5 of the Income-tax Act - time of accrual/receipt determining previous year - double taxation - Whether interest on FDR taxed in Assessment Year 2013-14 could be sustained when the assessee acquired the right to receive the amount only after the High Court judgment and the same amount was offered to tax in later assessment years. - HELD THAT: - The Tribunal found that the assessee acquired the right to receive the interest only after the High Court's order dated 15/11/2016, and the amount was received in the taxable territory thereafter and offered to tax in Assessment Year 2017-18 (and also in 2016-17). Applying the rule in Section 5 that income of a resident includes income received or deemed to be received in the taxable territory in the relevant previous year, the Tribunal held that the interest was not taxable in Assessment Year 2013-14. Taxing the same amount in AY 2013-14 would amount to double taxation. Accordingly the addition made in AY 2013-14 was deleted. [Paras 9]Addition of interest on FDR in Assessment Year 2013-14 deleted.TDS credit under Section 199 of the Income-tax Act - assessment year for which income is assessable - Whether the assessee is entitled to credit for TDS deducted on the said interest and in which assessment year such credit should be given. - HELD THAT: - The Tribunal noted that credit for tax deducted at source must be given to the deductee for the assessment year in which the income is assessable. Since the assessee offered the subject income for taxation in Assessment Year 2016-17 and Assessment Year 2017-18, the assessee is entitled to receive TDS credit in accordance with Section 199 for the assessment year(s) in which the income has been assessed. [Paras 10]Assessee entitled to TDS credit as per Section 199 for the assessment year(s) in which the income is assessable.Final Conclusion: The appeal is partly allowed: the addition of interest on FDR in Assessment Year 2013-14 is deleted, and the assessee is entitled to TDS credit in accordance with Section 199 for the assessment year(s) in which the interest income has been assessed (Assessment Year 2016-17 and Assessment Year 2017-18). 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.