Foreign interest income is not received in India merely because it appears in accounts or dividend computations.

Foreign interest on securities accruing and remaining outside British India was not "received in British India" under section 4 of the Income-tax Act, 1922 merely because it was entered in the company's accounts, balance-sheet, directors' report, or used in dividend calculations. Actual receipt in India, or a statutory deeming provision bringing the income within Indian receipt, was required. As the interest was kept and reinvested abroad and no remittance or equivalent transmission to India was shown, it could not be assessed on a receipt basis. The reference was therefore answered in favour of the assessee and against the Revenue.

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Issues: Whether interest accruing outside British India on foreign securities, though included in the company's profits and reflected in dividend computations, could be treated as received in British India.

Analysis: Section 4 of the Income-tax Act, 1922 applies to income accruing, arising or received in British India and to income deemed by the Act to be so received. The deemed-receipt provisions did not cover the case. The interest on the foreign securities had been kept and reinvested outside British India and was not remitted to India. Mere inclusion of that interest in the accounts, balance-sheet, or directors' report, and the use of total profits for dividend computation, did not amount to receipt in India. Receipt would require actual transmission into India or its equivalent by a recognised commercial method, which was not shown.

Conclusion: The interest was not received in British India and could not be assessed on that basis.

Final Conclusion: The reference was answered against the Revenue and in favour of the assessee, with costs awarded to the assessee.

Ratio Decidendi: Foreign income is not "received in British India" merely because it is entered in the company's accounts or used in calculating distributable profits; actual receipt in India, or a statutory deeming provision, is required.

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