1929 (3) TMI 8

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.... British India cannot be taxed as income arising within British India unless and until 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 Rs. 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 ....

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....servations of Napier and Krishnan, JJ., in The Secretary to the Board of Revenue, 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.....