Ayyangar, J. - (1.)This appeal comes before us by virtue of a certificate of fitness granted by the High Court of Madhya Pradesh under S. 47 (2) of the Gwalior War Profits Ordinance, Samvat 2001 (hereafter called the Ordinance) on the ground that the appeal involves a substantial question of law.
(2.)The question of law which arises in the appeal relates to the proper construction of R. 3 (1) of the Schedule of the Ordinance. The respondent - M/s. Binodiram Balchand is the name under which a Hindu undivided family which was resident in the State of Gwalior carried on various businesses in that State. Profits derived from businesses carried in the State were charged to War Profits Tax under the Ordinance. Among the businesses carried on by the respondent was its employment as the Secretary, Treasurer and Managing agent of a textile mill which was a limited company bearing the name of Binod Mills Company Limited, Ujjain. The appeal is concerned with the computation of the profits of the respondent to War Profits Tax under the Ordinance, which it might be stated at the outset, was on lines very similar to the Indian Excess Profits Tax Act, 1940.
(3.)The chargeable accounting period with which the appeal is concerned, is the period commencing from July 1, 1944, to October 16, 1944. The respondent - assessee submitted its return and thereafter the War Profits Tax Officer by his assessment order dated July 9, 1951, determined the taxable income of the assessee for this chargeable accounting period at Rupees 12,16,145/- and assessed it to tax in the sum of Rs. 2,02,691/-. Several points were raised in relation to this assessment order by the respondent, and one of them related to the inclusion in its assessable profits of a sum of Rs. 11,09,332/- which was received by the respondent on July 5, 1944, being the dividend declared and paid by the Binod Mills Ltd. for 1943 on the shares held by the respondent. It was the contention of the respondent that this sum was its income from an investment pure and simple and was not "profits" from business, and so could not be included in its taxable profits on a proper construction of the relevant provisions of the Ordinance. From the assessment order the respondent filed an appeal to the appellate authority which however was unsuccessful. A revision to the Commissioner of War Profits Tax met with the same fate and thereafter the respondent prayed for a reference to the High Court under S. 46 (1) of the Ordinance which ran thus:
"46 (1) If, in the course of any assessment under this Ordinance or any proceeding in connection therewith, a question of law arises, the Commissioner, may, either on his own motion or on reference from any War Profits Tax authority subordinate to him, draw up a statement of the case and refer it with his own opinion thereon to the High Court."
The Commissioner acceded to this request and referred for the opinion of the High Court three questions:
"(1) Whether the dividend income of Rs. 11,09,332/- received from the Binod Mills was chargeable under the War Profits Tax Ordinance

(2) Whether certain bad debts written off by the assessees could be allowed as deductions in computing profits for war tax purpose

(3) Whether the expenses of assessees' branch at Gwalior which was defunct, could be allowed as admissible expenses -
The High Court answered questions 2 and 3 in favour of the department, but the first question was answered in the negative and in favour of the assessee. There is now no dispute as regards question 2 and 3 and the appeal is confined to the correctness of the answer to the first question.