Prepare burnt sugar by placing 1/2 white sugar into a heavy skillet over medium high heat, stirring constantly with a wooden spoon as sugar melts. When it becomes very dark brown, remove from heat, add hot water very slowly and stir until dissolved. Set aside to cool.
Preheat oven to 350 degrees F (175 degrees F). Line two 9 inch round baking pans with parchment paper.
Sift the flour, baking powder and salt together three times.
Cream the butter or margarine with the remaining 1 1/4 cups white sugar until light and fluffy. Add the eggs 1 at a time, beating thoroughly after each. Stir in the vanilla and the burnt sugar syrup mixture.
Add the dry ingredients and milk alternately to the creamed mixture. Beat until smooth. Pour batter into the prepared pans.
Bake at 350 degrees F (175 degrees C) for 25 to 30 minutes.