1929 (3) TMI 8

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..... til they are received in or brought into British India and that as the petitioner did not actually receive interest on the loans he could not be taxed simply because he was getting compound interest. These objections were overruled but on the request of the petitioner the following question was referred to us for decision: Whether the sum of ₹ 5,578 can be taxed under Section 4 of the Income-tax Act as income accruing or arising or received in British India during the year of account, Akshaya. 2. It was asserted by the petitioner during the enquiry before the Income-tax Officer that the moneys were lent on the ordinary Tavanai system and we must take it that the usual incidents of a loan with an agreement to pay Tavanai interest .....

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..... e, Income-tax, Madras v. Arunachalam Chettiar (1920) I.L.R. 44 M. 65 at 92 and 99: 39 M.L.J. 649 (S.B.) as to when interest will, though not actually received, be deemed to have been received. Reference has been made by petitioner's advocate to The Board of Revenue v. Pydah Venkatachalapathy Garu (1922) 16 L.W. 174 (F.B.), but that case went on the ground that there was nothing in the documents or evidence to show that there was any discharge of the interest due or constructive receipt of the sum. We are of opinion that the petitioner must for the purposes of assessment to income-tax be deemed to have received interest though it was not actually paid in cash. 3. The next question is whether he received it in British India within the .....

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..... money-lender carrying-on business in British India and in the course of such business lends money to persons outside British India. It is therefore unnecessary for us to consider the cases cited which had reference to business having branches outside British India. 6. Reference was made to Gresham Life Assurance Society v. Bishop (1902) A.C. 287, Farmer v. The Scottish Widows' Fund Life Assurance Society 5 Tax Cases, 502 and Scottish Provident Institution v. Farmer 6 Tux Cases 34, where it was held that actual receipt of interest or profits is necessary and that a mere inclusion of the amounts in the balance sheet or accounts is not sufficient to make income received in foreign countries taxable. The explanation to Section 4 embodie .....

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