Indian concern test under surtax law requires substantial ownership, management and control in India; foreign bank branch fails it.

Rule 1(x) of the First Schedule to the Companies Profits (Surtax) Act, 1964 excludes interest only if it is received from Government, a local authority, or an Indian concern. An "Indian concern" requires ownership, management, and control to be substantially in India; mere business operations through an Indian branch do not satisfy that test. A foreign-incorporated and non-resident bank with a branch in India therefore does not become an Indian concern solely by carrying on business in India, and the interest received from that branch cannot be excluded under rule 1(x).

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Issues: Whether interest received by a non-resident company from the Indian branch of a foreign-incorporated bank could be excluded under rule 1(x) of the First Schedule to the Companies Profits (Surtax) Act, 1964 on the footing that the bank was an "Indian concern".

Analysis: Rule 1(x) excludes income by way of interest or fees only when received from Government, a local authority, or any Indian concern. The expression "Indian concern" was held to denote more than mere business presence in India; it requires the concern's ownership, management, and control to be substantially in India. A branch in India of a company incorporated and resident abroad does not satisfy that test merely because it carries on business within India. The comparison drawn with other statutory expressions referring to foreign enterprises did not alter the meaning of the words used in this rule.

Conclusion: The bank was not an Indian concern, and the assessee was not entitled to exclude the interest under rule 1(x).

Ratio Decidendi: For the purpose of rule 1(x) of the First Schedule to the Companies Profits (Surtax) Act, 1964, an "Indian concern" is one whose ownership, management, and control are substantially in India; a foreign-incorporated non-resident entity's Indian branch is not enough.

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