TMI Blog1958 (10) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... carried on its business at Baroda, but it used to make its purchases of stores, fuel and raw materials such as cotton in British India. We shall refer to this mills company hereafter as the assessee . The assessee became liable to pay excess profits tax in accordance with the law promulgated in the Baroda State in a Huzur Ordinance called the Excess Profits Ordinance, 1943. It will be convenient at this stage to set out certain provisions of that Ordinance: 2. Excess Profits Tax Act applied to Baroda State: The Excess Profits Tax Act (No. XV of 1940) in force in British India as modified up to date shall apply to the Baroda State with the modifications shown in the Schedule annexed hereto from 1st August, 1943. 3. Rate of Excess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd were to be charged to the Fund. For the chargeable accounting period 1942, the excess profits tax payable by the assessee mills was ₹ 7,93,544. The assessee mills instead of paying the amount in cash to the Accountant-General purchased Government of India Loan Paper and sent it to the Accountant-General. In respect of the chargeable accounting periods 1942, 1943 and 1944, the total demand for excess profits tax made on the assessee was for ₹ 38,86,609. This was paid by the assessee mills from time to time by handing over Government of India securities of the face value of ₹ 38,43,000 and the balance was paid by cheque. All the securities which were tendered to the Accountant-General and accepted by him in lieu of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty of the assessee and the interest realised by the Accountant-General on these securities was the income of the assessee which could only be taxed under the head of Interest on Securities . The Tribunal rejected that contention and the assessee has come before us on this reference. Two questions have been raised for our determination: (1) Whether the sum of ₹ 28,178 is assessable to tax in the hands of the assessee under the head 'interest on securities' referred to in section 8 of the Act? (2) Whatever may be the answer to the above question, is the assessee entitled to any credit for tax in accordance with the provisions of section 18(5) read with section 18(3)? It has been argued before us by Mr. Palkhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was a levy, and there is little scope for the argument that what was paid by the assessee was not excess profits tax. The fact that it was to be repaid for the benefit of the industry cannot affect or alter its true nature and incidents. The securities were transferred in the name of the Accountant-General; they became investment of the Fund and not of the assessee. It was the Accountant-General who was entitled to draw interest on the same and in fact received interest on those securities. On these facts, it is not possible for us to accepted contention raised on behalf of the assessee that it was the assessee who received interest on those securities. No doubt, the whole amount with interest actually received on the securities was ultim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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