1. A preliminary objection has been taken to the hearing of this Reference that the order made by the learned Judge of the Original Side, under Section 45 of the Specific Relief Act, was made without jurisdiction and, therefore; that we should decline to hear the Reference, which has been made to us by the Board pursuant to that order under Section 51 of the Indian Income Tax Act. The Board did not appeal against that order, as they might have done, and as they did in the case of some other similar orders, and Section 51 empowers and requires them to make a Reference on the application of the assessee, unless they are satisfied that the application is frivolous, or that a Reference is unnecessary. They have made the Reference pursuant to the order, instead of appealing against it, and, in the circumstances, we think we are bound to dispose of it.
2. We have heard the points fully stated on both sides and the question appears to resolve itself into this: Are the assessees entitled to the benefit of the first proviso to Section 6 of the Excess Profits Duty Act of 1919? Section 6 provides that the standard profits of a business, for the purpose of calculating the excess profits duty, may be calculated in several ways. One of the ways which was adopted here is provided for in Section 6, Sub-section (1), Clause (b), Sub-clause (iii). 'If the profits of the business have been assessed for the said purposes in all the five years 1913, 1914, 1915, 1916 and 1917--the aggregate of one-fourth of the profits assessed in the years' 1913 and 1914 and in such two of the years 1915,1916 and 1917 as may be selected by the said person' may be taken. The proviso says: 'that if the average capital employed in the business in the years adopted for the purpose of determining the standard profits is less or more than the capital so employed at the end of the accounting period, there shall be made to or from, the standard profits an addition or a deduction, as the case may be, which shall bear to the standard profits the same proportion as such increase or decrease of capital bears to the average capital so employed in the years so adopted.' Then there is this Explanation: 'For the purpose of ascertaining the average capital employed, the capital employed in the business in any year shall be deemed to be the capital so employed at the end of that year.' This is to be read with the provisions of Section 6, Sub-section (4),--'Notwithstanding anything contained in this section no increase of capital made after the 31st December, 1918, shall be taken into account in any case, and no such increase before that date shall be taken into account when it, appears or to the extent to which it appears that the increase was made with intent to evade or has the effect of evading the payment of the excess profits duty.'
3. Now, what happened was, that the petitioners here, as shown in their affidavit, have been assessed for the years 1913-1914, 1914-15, 1916-17 and 1917-18 on incomes respectively of Rs. 1,00,000, Rs. 1,20,000, Rs. 2,66,441 and Rs. 3,56,000, and in the accounting year 1918-19, on an income of Rs. 3,01,748-6-11. The contention of the petitioners is that, though in 1918-19 they made a decreased profit on the capital which was employed in their business on the 31st March 1918 they had prior to that date increased their capital approximately by 6 lakhs of rupees, and, if that were established, the result would be that their standard profits would have been increased to such an extent as altogether to exempt them, from the payment of excess profits duty. If the petitioners wished to obtain the benefit of that proviso, it was their duty to put before the Collector and the Board of Revenue satisfactory evidence that their capital had been increased as alleged by them. They did not do so, but contended themselves with putting in some very inconclusive returns. The original assessment by the Collector may have been unduly hurried, but when the petitioners appealed to the Board of Revenue, the Board sent the case bade, to the Collector and the petitioners had an opportunity of putting any further evidence, or any further explanation, before the Collector, but they refused to avail themselves of it and stood upon the returns which they had already furnished. On these materials, the Collector reported that he was unable to say what their original capital was or what the increase of capital was, and the Board, having considered the matter, came to the same conclusion as the Collect' or, and, in their Order of Reference, they have given forcible reasons for showing that it was quite impossible for them to say that it had been established that there had been this increase of capital on which the petitioners claim exemption from excess profits duty.
2. In these circumstances, all that can be said is that the petitioners have not brought themselves within the exemption and there is no occasion for any further answer, to the Reference, as the: Board's action is right. The assessees must pay the costs of this Reference Rs. 250.