Double taxation of interest income denied, with prior-year assessment verification and corresponding TDS credit directed.

Interest income on CCDs could not be brought to tax twice in the same assessee's hands for different assessment years where it had already been offered and taxed on accrual basis earlier. The Tribunal directed verification of the Form 26AS position and the prior-year tax treatment, and if the income had already been assessed, the taxable income for the year under appeal was to be recomputed by excluding the duplicated amount. It also directed corresponding TDS credit to be allowed after verification. The remaining grounds were treated as infructuous.

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Issues: Whether the same interest income could be taxed twice in the assessee's hands for different assessment years on accrual and receipt basis, and whether corresponding TDS credit had to be granted after verification.

Analysis: The assessee had offered interest income on CCDs in earlier assessment years and again in the year under appeal. The Tribunal found that, on the peculiar facts, the object of assessment is to determine the correct tax liability and that the same income cannot be taxed twice in the hands of the same assessee. It directed verification of whether the income reflected in Form 26AS for the earlier years had already been offered to tax, and, if so, recomputation of the taxable income for the year under appeal by excluding the amount already taxed earlier. The Tribunal also directed grant of TDS credit corresponding to the verified income. The remaining grounds were treated as infructuous.

Conclusion: The addition was directed to be recomputed after verification, with corresponding TDS credit to be allowed; the assessee succeeded on the core issue.

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