1940 Dispersal, bad pitting, would it have been released like that?

[waw44]

So I picked up this project 1940 dispersal No1. It has black paint on the metal, which some say could be Indian, or it may be a post war BSA FTR work. The stock is a light wood stock, no stock disk, whihc makes me think post war BSA work.

What has me both curious and worried is the pitting on top of the barrel shank. It seems to be under the black paint. Would it have been released from FTR like that? The bore is very nice. Do you think this is restorable to shooting condition, or destined to be a wall hanger with this barrel issue?

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