Interest income requires proof of actual receipt; a mere accounting credit or presumption is not enough.

Interest credited in the accounting year was held not assessable as income unless the revenue proved actual receipt or realisation by the assessee during that period. A mere entry of credit, or a presumption drawn from the debtor firm's conduct, was insufficient without clear evidence that the amount had in fact been paid or otherwise received. On the record, there was no direct or presumptive material establishing receipt, and the income-tax authorities could not justify an inference that the assessee had withheld books or that the debt had been discharged. The assessment was therefore unsustainable and the issue was decided in favour of the assessee.

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Issues: Whether interest allegedly credited in the accounting year could be assessed as income in the absence of evidence that it was actually received or realised by the assessee firm.

Analysis: The assessment could stand only if there was a clear finding, supported by evidence, that the interest had been received in some form by the assessee during the accounting period. A mere presumption from the conduct of the debtor firm, or from an entry showing credit of interest, was insufficient. Interest accrued due to a money-lending firm is not taxable as income unless realised or received in the relevant year. The record contained no direct or presumptive evidence showing receipt of the amount by the assessee, and the materials relied upon by the income-tax authorities did not justify the inference that the assessee had withheld books or that the debt had in fact been paid.

Conclusion: The question of receipt of interest was answered in the negative, and the assessment was held unsustainable in favour of the assessee.

Ratio Decidendi: Interest credited or accrued is not taxable unless the revenue proves actual receipt or realisation in the accounting period by evidence, not by unsupported presumption.

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