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Interpretation of excess profits tax law in Baroda State for the assessment year 1949-50 and previous years; Taxability of interest on securities received by the assessee; Entitlement of the assessee to credit for tax under specific provisions. Analysis: The judgment revolves around the assessment of excess profits tax for the assessee, Shree Ambica Mills Ltd., in connection with the Excess Profits Ordinance, 1943 in Baroda State. The primary issue was whether a sum received by the assessee, which the Department sought to tax, constituted interest on securities. The Tribunal found that the sum did not represent interest on securities in the hands of the assessee, leading to the present reference. The first question raised was whether the sum in question was assessable as interest on securities under the relevant tax provisions. The argument centered on the ownership of the securities and the entitlement to interest. The court held that the securities belonged to the Excess Profits Fund, not the assessee, and the interest earned was not the income of the assessee under the head of "Interest on Securities." Thus, the first question was answered in the negative. The second question addressed the entitlement of the assessee to any credit for tax under specific provisions. The court emphasized that the assessee was not legally or beneficially interested in the securities held by the Fund, dismissing the contention that the Fund acted as a bare trustee for the assessee. Consequently, the second question was also answered in the negative. In conclusion, the court dismissed the notice of motion taken out by the assessee and directed the assessee to pay the costs. The judgment clarified the tax treatment of the sum in question, emphasizing the legal ownership of the securities and the absence of entitlement to interest for the assessee.
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