This has happened before, but with different results. In "The Time Monster" the Third Doctor landed his TARDIS inside the Master's TARDIS. As a result, the Doctor's TARDIS was in the Master's TARDIS' console room, but the Master's TARDIS was also in the Doctor's TARDIS' console room.
However in both "The Keeper of Traken" and "Logopolis" the Master was able to land a TARDIS inside another TARDIS, and there was no "each is inside the other". Instead, his TARDIS simply materialised and took on an appropriate appearance inside another TARDIS.
"The Day of the Doctor" has a scenario in which apparently the War, Tenth and Eleventh Doctors' TARDISes also apparently occupy the same place, resulting in the desktop glitching.