The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) comprising Shri Waseem Ahmed, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member has held that the interest income received on maturity of Government bonds cannot be taxed in the year of accrual only for the reason that the deductor bank has deducted TDS on the entire interest amount at the time of payment on cash basis, and the same would amount to double taxation.
The assessee, Ramanlal Jawanmal Shah HUF, received maturity interest amount of Rs. 601,000/- on Government of India 8% saving (taxable) bonds on which the deductor HDFC Bank Ltd, deducted TDS on the entire maturity amount of Rs. 6,01,000 on cash basis. However, the assessee has already offered the yearly amount of interest in earlier years on accrual basis.
Before the Tribunal, the assessee submitted that if the entire maturity amount of Rs. 6,01,000 is again subject to tax in the impugned year, it would amount to double taxation since the annual interest amount has already been offered to tax in various previous years on accrual basis. It was also submitted copies of acknowledgement of return of income for the various years in support of the fact that the interest income which has accrued on annual basis has been offered to tax in the various respective years.
Accepting the contentions of the assessee, the Tribunal held that “In our considered view, we are in agreement with the Ld. Counsel for the assessee that since the interest income has been offered to tax in the respective assessment years (from AY 2011-12 to AY 2017-18) on accrual basis, the same income cannot be taxed in the impugned assessment year under consideration only for the reason that the deductor HDFC bank has deducted TDS on the entire interest amount at the time of payment on cash basis, since the same would amount to double taxation. Therefore, the order of Ld. CIT(A) is set aside and the appeal of the assessee is allowed.”
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