1. This reference under the Indian I.T. Act, 1922, related to the assessment year 1961-62, for which the previous year ended on March 31, 1961. During the above previous year the assessed, Bhim Sen Khosla, received a sum of Rs. 30,819 by way of interest on U. P. Zamindari Abolition Bonds held by him. The interest was payable annually but there was some litigation and, thereforee, the interest was not paid from year to year, but eight installments were paid together in the year which ended on March 31,1961. The assessed claimed that only the eighth installments which became due to him on July 1, 1960, could be included for assessment in the assessment year 1961-62 and that the earlier installments could not be so included. This contention was, however, rejected by the ITO, by the AAC and by the Appellate Tribunal, and hence this reference at the instance of the assessed.
2. One more fact that remains to be mentioned, as some emphasis has been laid upon it, is that when the assessed received the sum of Rs. 30,819 on March 14, 1961, the filed the revised returns of income on October 21, 1961, for the assessment years 1957-58 to 1960-61 showing in each return the annual accrual of interest as attributable to the said period and claiming adjustment of tax deducted at source in respect of each of these years. On March 29,1962, the ITO completed these assessments including therein the proportionately accrued interest and giving credit for the tax deducted at source.
3. In view of the above situation the question of law which has been referred to this court is in the following terms :
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the amount of Rs. 30,819 received by the assessed during the accounting year could be brought to tax on receipts basis in assessment year 1961-62, having regard to the facts that the same income was taxed in earlier years ?'
4. In fact, thereforee, two questions have been referred to us. The first is as to whether the sum of Rs. 30,819 was rightly assessed in the assessment year 1961-62, on receipt basis. The second is whether even if it is so assessable, the assessment could be upheld having regard to the fact that the interest income attributed to the earlier years has been taxed in those earlier years.
5. So far as the first question is concerned, the income in question is assessable under the held 'Income from securities' under s. 8 of the 1922 Act. Under that section the tax was payable by an assessed under the above head in respect of interest receivable by him on the securities of the type mentioned therein. In Lalbhai Dalpatbhai v. CIT : 22ITR13(Bom) the word 'receivable' has been interpreted as meaning 'income actually received '. The decision has explained at length the reason why the word 'receivable' has been used even though the idea was that the income was taxable only on receipts basis. This view was followed by the High Court of Madras in the case of Karumuthu Thiagaraj Chettiar v. CIT : 24ITR593(Mad) . The interpretation placed by this decision has been accepted by the decision of this court (to which one of us was a party) dated 7th April, 1978, in ITR No. 78/69, CIT v. Rajindar Kumar Mohatta. The above reference, however, arose under the 1961 Act and after referring to the position under the 1922 Act, the Bench of this court proceeded to consider the question whether the same position continued under the corresponding provisions of the 1961 Act. This court concluded that under the 1961 Act the above income was assessable on accrual basis and not when it was actually received. In coming to this conclusion the court laid emphasis on the provisions contained in s. 18(1) & (2) of the 1961 Act. But in the present case we are concerned only with the 1922 Act and for the reasons which have been discussed by the Bombay High Court and the Madras High Court and accepted by the court in the earlier decision we have to hold that the interest income of Rs. 30,819 was assessable under s. 8 only in the previous year of its receipt. In other words the inclusion of the above sum in the assessment for 1961-62, was in accordance with the provisions of the 1922 Act.
6. Mr. Jagdip Kishore, learned counsel for the assessed, however, contended that the above inclusion should be deleted because the same income had been assessed in the earlier years on the basis of accrual. He urged that the department cannot tax the same income twice over and he relied in this connection on the decision of the Supreme Court in Laxmipat Singhania v. CIT : 72ITR291(SC) . We entirely agree with the learned counsel that it is a fundamental rule of the law of taxation tat unless otherwise provided income cannot be taxed twice. But the question is, which of the two inclusions in the present case is correct : whether it is the inclusion in the assessment years 1957-58 to 1960-61, or in the assessment year1961-62. For the reasons already stated, we are of the opinion that the inclusion of the entire amount of interest received in the assessment year 1961-62, was in accordance with law. In the case cited by the learned counsel the position was different. In that case an amount was sought to be brought to tax in the assessment year 1943-44, whereas according to the provisions of s. 23A of the Act it was deemed to be the income of the assessed in the previous year relevant to the assessment year in which the annual general meeting of the company in question had been held. The court, thereforee, held that the amount could not be sought to be assessed in the assessment year 1943-44, but that it should have been assessed if act all only in the assessment year 1940-41. In the present case on the other hand the income was rightly includible only in the assessment year 1961-62, and not in the earlier years. However, we should like to say that the department cannot seek to maintain the assessment of the same income in both sets of years. Consequent on our decision that it was rightly includible in the assessment year 1961-62, it is necessary that the department should take immediate steps to exclude the income from the purview of the assessments for 1957-58 to 1960-61. We are quite sure that the department will take necessary administrative action to see that this double taxation is not maintained by giving the assessed appropriate relief in regard to the earlier years.In this connection two aspects have been brought to our notice by the learned counsel appearing for the parties. The learned counsel for the assessed stated that when the entire income was sought to be assessed in one year he had made an application to the Commissioner under s. 89 of the Act sometime in 1963. He alleged that this application had not been disposed of. Learned counsel for the department produced the file from which it is seen that the assessed's application under s. 89 for the assessment year 1961-62, had been rejected but it had been suggested to him that an application should be filed for the assessment year 1962-63. We do not know the reason why this suggestion was made and what happened later. Secondly, on behalf of the department, it was pointed out that though the interest income had been included in the earlier years on accrual basis the assessed had been given credit for the tax deducted at source not only in the earlier years but also in the assessment year under consideration as is apparent from the assessment orders included in the printed papers. We do not consider it necessary to go into these questions in this reference as they do not arise out of the order of Tribunal or the controversy between the parties at the earlier stages. The only question which the assessed had raised was that the inclusion in the assessment year 1961-62 should be deleted, because portions of the amounts had been assessed in earlier years. As we have already pointed out this is not the correct remedy. The correct remedy for the assessed to seek is the refund in respect of the earlier assessments which the department is inequity bound to grant. It is for the department to consider the most appropriate manner in which this relief to the assessed should be worked out having regard to both the terms of s. 89 as well as the principle against double taxation that is clearly implied in the Act.
7. With the above observations we answer the question referred to us by saying that the amount of Rs. 30,819 was liable to be brought to tax on receipts basis in the assessment year 1961-62. This would be so deposit the fact that the same income was taxed in earlier years but the department is under an obligation to relieve the assessed from the effect of double taxation by appropriate action. The reference is disposed of in the above terms. In the circumstances we make no order as to costs.