2025 (2) TMI 974 - AT - Income Tax

Rectification under Section 154 denied for double taxation of interest income already taxed on accrual basis

ITAT Mumbai held that rectification u/s 154 was not applicable as there was no mistake apparent on record regarding double taxation of interest income. ... Rectification of mistake u/s 154 - Double taxation of the same interest income - same interest income had already been offered to tax earlier on accrual basis - contention of the Revenue is that the intimation u/s 143(1) was processed as per the details/information stated in the return of income for the AY 2012-2013 and the details of TDS available in form 26AS - HELD THAT:- There was no mistake apparent on record. It is settled legal position that same income cannot be taxed twice in the hands of the Assessee, once on accrual basis and then again on receipt. Given the peculiar facts and circumstances of the present case, the technicalities ought not to obscure justice. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. AO must not take advantage of ignorance of the assessee as to his rights [Circular No. 114 XL-35 of 1955 issued by the Central Board of Direct Taxes, dated 11/04/1955]. Accordingly, we direct the AO to verify that the income as reflected in form 26AS for the AY 2010-2011 and 2011-2012 has been offered to tax as income for the Assessment Year 2010-2011 and 2011-2012, respectively. In case the on verification, the aforesaid is found to be correct, the AO is directed to recomputed the taxable income of the Appellant for the Assessment Year 2012-2013 by reducing from the aggregate interest income earned by the Appellant on CCDs for the AY 2010-2011, 2011-2012 and 2012-13 the amount of interest income already offered to tax for the Assessment Years 2010-2011 and 2011-12. The Assessing Officer is also directed to grant credit of TDS corresponding to the aforesaid income. The present appeal before the Appellate Tribunal concerns a tax dispute involving an Assessee who had offered interest income for taxation in the Assessment Year 2012-2013. The core issues raised by the Appellant include the alleged double taxation of the same interest income in multiple assessment years, the denial of Tax Deducted at Source (TDS) credit, and the imposition of consequential interest under sections 234B and 234C of the Income Tax Act, 1961. The Appellant contended that the interest income had been erroneously offered for taxation twice, once on an accrual basis and then again on a receipt basis, leading to a discrepancy in the TDS credit claimed.Upon review of the facts and submissions, the Tribunal found that the Appellant had indeed offered income exceeding the actual amount by INR 3,53,56,379 for the Assessment Year 2012-2013. The Appellant's explanation was that the income had been mistakenly reported twice due to differing accounting methods used in previous years. The Revenue authorities argued that the intimation processed under Section 143(1) of the Act was based on the information provided in the return of income and Form 26AS, and thus no error existed in denying the TDS credit claimed by the Appellant.In its analysis, the Tribunal acknowledged the legal principle that the same income cannot be taxed twice for the same assessee. Considering the specific circumstances of the case, the Tribunal emphasized the need for a just assessment that aligns with the taxpayer's actual liability. Citing Circular No. 114 XL-35 of 1955 issued by the Central Board of Direct Taxes, the Tribunal directed the Assessing Officer to verify the correct reporting of income for the preceding assessment years and to adjust the taxable income for the current year accordingly. The Tribunal instructed the Officer to reduce the aggregate interest income earned by the Appellant on Compulsorily Convertible Debentures (CCDs) for the relevant years and grant TDS credit where applicable.Consequently, the Tribunal allowed Ground No. 1 raised by the Appellant for statistical purposes, dismissed Ground No. 2 and 3 as moot, and partly allowed the appeal. The final determination was made on 20.02.2025, with the Tribunal's decision providing clarity on the correct assessment of the Assessee's tax liability and the treatment of the disputed interest income.