J. K. Woollen Manufacturers v. Commissioner Of Income-Tax, U.p

J. K. WOOLLEN MANUFACTURERS COMMISSIONER OF INCOME-TAX, U.P. August 2, 1968 [J. C. SHAH, V. R.AMASWAMI AND A. N. GROVER, JJ.J Income-tax Act (11 of 1922), s. 10(2)(xv)-Commission to employee higher when profits exceed a lakh-Whether deductable from employer's assessable incorne. The assessee-a Mill, appointed V, as its General Manager, on a salary of Rs. 1000/- p.m., and car allowance df Rs. 250/- p.m., plus commission c of 12±% on the net profifu of the furn and in case the profits exceeded Rs. 1 lakh, the commission payable was 25 % . In the first year of the appointment the mill suffered loss, next year commission was paid at 12t% of the profits, and the next year commission paid was 25 % as the profits exceeded the figure stipulated. After the death of V, one of the Directors was appointed to manage its affairs and given a total remuneration of Rs. 24,000/ - per annum and the post df General Manager was abolished. The assessee claimed deduction from its assessable income the amount D paid to V at the rate of 25 % of the profits. The Income-tax Officer disallowed the claim and determined Rs. 5,0001- as reasonable amonnt payable. Against the amonnt disallowed, the assessee appealed to the Appellate Assistant Comm;ssioner, who allowed payment of commission at 12!% as in its view that rate was reasonable considering the practice in similar 'business concerns. The assessee a,ppealed to the Appellate Tri-bunal and the appeal was dismissed. The Tribnnal took the view that the General Manager carried responsibility equal to that of the Director, so E the commission paid to V, in excess of Rs. 24,000/- per annum, i.e., the aIIX)unt paid as total remuneration to the Director, was not really paid wholly for the purpose of carrying on business. On reference, the High Court answered the question against the a.ssessee. The assessee in appeal to this Court contended that the higher rate of commission on profits was inserted to create the interest of V, who had special aptitude and experi-ence in the line and the mill was running at a loss and it was only after sometime of V's taking over that the mill made large profits, so the amount F paid to V, was an amount laid out or expended wholly or exclusively for the purpose of the business of the assessee, and it was wrongly disallowed. HELD : In the circumstances established by the assessee, the entire amonnt paid to V, was an amount laid out or expended wholly and ex-clusively for the purpose df the assessee. In applying the test of commercial expediency for determining whether G an expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure has to be adjudged from the point of view of the businessman and not df the Income-tax Department. It is, of course, open to the Appellate Tribunal to come to a conclusion either that the alleged payment is not real or that it is not incurred by the assessee in the character of a trader or it is not laid out wholly and ex-clusively for the purpose of the business of the assessee and to disallow it. But it is not the function of the Tribunal to determine the remuneration H which in their view should be paid to an employee df the assessee. An employer in fixing the remuneration of his employees is entitled to con~ sider the extent of his business, the nature of the duties to be performed' and the special aptitude of the employee, future prospects of extension by the bu~incs.-. and " host of other rc1'1tcJ circun1st:incL~. The question as to whether an amoun1 claimed as expenditure was laid out or expended wholly or exclusively for the purpose of busint.>Ss, profession or vocatjoo <tS required under s. 10(2) (xv) of lhL Income-tax Act ha~ to he decided on the facts and in the li)'?:nt of the circumstances of each particular case. But the final conclusion on the ;idmissihilily of an allov1ancc is one of law. 1529 D; 52911-530 CJ Ho ho Het HTT HART WIA, FAT aT (J. K. Cotton Manufacturers Commissioner of[ncomestax, U.P.) (2 sya, 1968) ( lo Ho Blo we, Alo WHATAY BAC To eo Maz) gepu era Uae (1922 @1 11), ar 10(2) (av)—aqaE Tas alee at asTa a eat sATA—aa aaa St fala sna HS sa sara aa 3 2fraifedl-fira 9 ott Ser at maa mer sare FBI A wfeaTa 1,000a1 % arqay, We sfama 250 qm % we at ay cAFe geats8124 ofaga& adiga at fram fear ate afe am ca aeequ & afas et at ta adiga 25 ofaaa dartfagfa F sua aga faea alfa sort agtt aad at adiga anit % 12) afaaads feeafaq nar ae sad aaa ag H aeiiga 25 sfawa % fear @ fear varaaifs am aadfar dar & afte garari.ot ag at gage gydagfia % arsenite cad aa & faqfeattFaaeafi ay 24,000 qt at ase aiftefs ox fae Pearvar, am Aermaeae a Ie ama at fear nar fratftet & anit} 26 sfawa at axqt St <a of} Se at at at sa aaa fala aa a 8 ger 2a at aia at |mat afarsa aa at aise ax fear Ne gfeama: 8a we 5,000aq santa stl st wa anise stag at Prati a sak Pax attaages MAR (tea) 8 at alt saa 12k qfawa ¥ fear a selea wr dereaqua at feu gate sak nah waa ata seat agadl § cafeqafa ot frat at ge ae ae aftaa ct) ald 2 ade afaacgFata at ae ata afea st dagafeaey a ae cieatq warfs ner sae a aia Feaa & afer & ana aga: alae a ofaay 24,000 aq2 8 afas fear aa eter aig Gee at ea ofthe [1969] 1 saotiteas $67 H db ng wan, geaa? SA FAIA Besta} fae et quar dea wTadt it ga eetgt sea rama aora nea ar saz fauffedl & faxfear| faatfiat @ ga cara F ade ah ae acaatfe anit aeanyasf Seat a gafaqteat at f at fe at fats ofa seraat siz aaifs ot ag at sa fagfats amar ak wana oa atax fae at aif satdt ae wt atlof ae are Pear ar aaa wey 22% aaa at fhe at airs ara Ta gar al gas a ag a at tHA Ang dt ag dat waar atPrati & ara B satafrequen aeAAAI GH TE A s7a RM TS a Taras aaa Ne qe ariae gt as HI-fafraifza—Prathet arr arfia stad ofifeafat Heat Sa wtday egal wy tat wan at at fraiftat & areare F sata & fae quiaaN Hara Bare ak ar say at ae at| frequen ae ga Ta el Ma ara F falesar aaH 99q Hae F qa FHfaa a quam ate maeqaar Pear mar 2, atfufeas soatiar ae gdaq ataN ata aay arzare Beata a a Pi orase Paar & efeesny a aaq atgfaamar at fata azar atat 2 | arite afaaca at ca fasag at aa at afe-ait 2 fe afaatua dara areafaa adl 2 ar ag fralfedt 2 aa sarod} at Bfaaa3 saa adt Paar 2 ar ag aaa Pratftat & Sra % gaAtsa F faq a calaarshe waraa adt Pear mar? ale fier ge araqe Gt saat age aRamar 2 fea ae maa stat afaaey ar arr adt 2 Pe saat uF alfaBaral a ear aifafes fear ara afecy faatss waa aaarfeat agiftsifaa faat ad ana, maa wit F feet az, aufea fia sa ateaileat at safa at ale saad & ffs ato qe, ara % Pear & aftqe, Be aga at aa dag ofefiafaat az fare ac aaar 2 | ag oye Pe aaag afr faa saa AA at sr atar fear MATS gaat ar MAeATAT BITATafa ay aay S sate & fax dt amg ar ad at ag 2 Aer fie gene eraGazat arr 10 (2) (xv) 8 mafga 8,ex om are Fata & ae7 ae aftheafeat 2aa ec fafafeaa Paar star aifee | Pea Peek aa at srastaat oe siftamaspel oem fafa wea 2 | SNAKC AYR, FAL FAA TATAEY TS BETA aga2 faface,65 seo cto mizo 381, ay fear Tar | wae seq fas seq fafade aaa saat saFT, FACsRat,63 ago gto mize 57, fares Fear mar | OoAL| So Bo SEA Heo AAT STAT TATA, So so [Fate TrAeATaT] 185° fafsa srdtett sfraifiar:1967 & do 591 arat fafaa sata| .a1958 a} do 424 aa mae fade Fy carers ssa earaiaa Fate 22 Hg, 1962 qa fata ae mee} faa fata gata aat ant ada||alae Hl Bz awat TAe at SMA 5 yzlo to Arezadtgeaey a Se Sgaat do a, ale sto Tal;st Hite TAo Hat sararaa ar fata aaratfaafa de craearal 4 fear | aayafa waa— C.l.T. /Jv111/)(n· v. Walcluu1cl & Co. Privl1t£' I.rd. 65 I.pr.R. _;s1, applied to. · Swndcshi Co11011 Mills Co. I.rd. v. C.1.1'., U.F'. 63 !. T. R. 57, rc.:fcrrccl to. CivIL APPEi.LAH JuRJsDICTION: Civil Appeal No. 591 of 1967. Appeal by special leave from the judgment ~nd order, dated May 22, 1962 of the Allahabad High (ourt in Income-tax Refer-ence No. 424 of 1958. M. C. Chag/a and B. P. Malrcs/11rnri, for the appellant. B. Sen, B. D. Sharma and R. N. Sachrhe,Y, for the respondent. The Judgmen.t of the Court was delivered by Ramaswami, J_ The appellant (hereinafter called the 'chses.cc') carried on the business of manufacture and sale of blankets and other woollen cloth. For the assessment year 1948-49 the asscssce claimed a deduction of Rs. 75,465 as commission paid to 1hc General Manager Shri. J. P. Yaish. According to the 1em1s of appointment Shri J. P. Yaish was to draw J fixed salary' of R.s. 1,000 p.m., commission of 12 l % on the net profits of the firm payable after the accounts had hcen ascertained fully by the auditors and a car allowance of Rs. 250 p.m. It was one of the terms of the appoinlment !hat in case the profits exceeded Rs. l lakh, the commission payable to Shri J. P. Yaish was 25%. Shri J. P. Yaish was also given free medical facility for himself and the members of his family. In terms of the letter of appointment Shri Yaish µot no commission in the first year as the mill suffered a loss. In the next year the profit being less than Rs. I lakh. Shri Yaish received a sum of Rs. 4,063 as commission. For the asse>;sment year 1948-49. the assessec paid a stun of Rs. 75,465 as commission to Shri J. P. Yaish calculated at the rate llf 25% on the profits. TI1e asscssee claimed deductton of the said amount from the assessable income. By his a"e"ment order. dated June 10, 1949, the Income Tax Officer disallowed the claim on the ground that it was excessive and quite unreasonable looking to the salary paid to Shri Yaish. He also found that no general practice of giving commission at the rate of 25 % existed in the assessce's line of hu,ine.<s. Takini; into account the circumstances of the case. the Income Tax Officer determined a sum of Rs. 5,000 as a reasonable amount pavahle as comm1ss1on. Against the dis-·allowance of Rs. 70.465 paid as commission · to the General A Manager, the assessee preferred an appeal to the Appellate Assis-tant Commissioner of Income Tax who by his order, dated October 31 1949 found that Rs. 5,000 was not sufficient and it was re;sonable to allow the payment of commission at the rate of 12!%. He according\y increased the commission payable from Rs. 5,000 to Rs. 37,732 in that year. The assessee took the B matter in appeal to the Income Tax Appellate Tribunal which by its order, dated July 10, 1950 dismissed the appeal. As directed by the High Court, the Appellate Tribunal submitted a: statement of case under s. 66(2) of the Income Tax Act, 1922 on the following question of law :- "Whether in the circumstances of the case, the sum of Rs. 37,733 paid to the General Manager Shri J. P. Yaish, which has been disallowed by the Income-tax Appellate Tribunal was an amount laid out _or expended· wholly or exclusively for the purpose of the business of the assessee ?" By its judgment, dated May 22, 1962, the High Court answered D the question against the assessee. Against the judgment of the High Court the present appeal is brought by special leave. OoAL| achat (qagayaa faaat ‘faatital’ ser war 2) araa ate wea Tateast & fatraty ale fama ar ara ear atl Fratca ay 1948-49 3Raw fraffidt 2 75,465 wad at cam at, ot saa Her THaH at Go do sedt aalz eutera at at, atdt ar aiar fear | fate % fadaat S aaqare af} godto Ser at 1,000 eae aft are & fara 8 fafeaa aaa, GA F GE arait F3123 ofaga % fear 8 acter Mt dedasl ae cal F quartafatiivaa az fer il Fagaiq zat, we 250 qa sla wes fearaaait aay faeat ati fates } Raval FS ow ae at ar fe afe @Ta as aTwat a afas tat at Fo to ag a 27 salar 25 sfaaa aaat wodte Sq ae sah eer Facet A frges Fafeear Gar at ora at| Prahaqa & fraed) Baga at aaa sua ag ale salar at fra satfa saast fir at afi sort ost at| sn ad art cH are B93 a BH AT, asSa at anlar ® we4,063 sat fra | frateq af 1948-49 & facRrafficl 2 at Bo dto dq at 75,465 aa sata F BIH fee| ag Hataam qc 25 sfaga at ac aeaaftya Pear aan art fratftal Aga wR atfaali saater 2a a atr at| maa aifhae 330 Ga, 1949 aamod fraleg mee aes TTR CT MAT WAAR BT fear fa agmeafas ar alc ut ade ate mg taal FAI ET qatar wytazE aT |gaa ae at car fe PraifictB areare at aah A 25 ofaga at at 8 wt ™23 at aye ararea san it adt 2 are at ofefeafaat at cata F cad gz,qaat wifeat A aelaa S wT A ghagma 2a tH 5,000 wat aaarftaa} 170,465 sad st,mer saTs St BAlTa F wd F fac ag a, araadt &%face ratte2 mae & sere sige (afla) & sacle sl| aes AQ(sche) 3 81 sramae, 1949 ave wae wrdar art ae Freee Frere f 5,000 “136eraaa aaey faye afr [1969] 1 eaofsoye aay cate adt Sate 124 ofaera tard slag waa ata ghaae ea | aaa METS MAT Asa ay S fax seq galas a cam 5,000 x97 a agi #t 37,733 aot a a | faralfedl| aaa at ada saae adie afr.ayat| aaaa 10 gag, 1950 Te wt wees ade aiftaac eli seq vad & falar ate sass geaq tag daz1922 a aa 66 (2) % wala frafefaa falas seg oe WIAA aT GAA s=qAUNT FB RA—| oar ame al aftieafaal § sy 37,733 a3 atafer wer seasoft Ho fo Ae at Aa 2 alt faa sas ate wee A aayac fear 2, Det wen 2 oh Maid 3S ara Flea e fae gearal Raaqaat Us as ay aa st as 2 eo”seq aqaiwa a 22 WE, 1962 aa wad faa a sea at satfaaiftal ® frex far) seq areaza fala & flex aa aie fatsCATT AKT HM TE Zt| xeam Bea Daz, 1922 at are 10 (2) (x) we a 10(2) (xv)gad aaa Wt Ta AHI AI—:-«10 (2) (x): Any sim paid to an employee as bonus or (2) (x): Any sim paid to an employee as bonus or (x): Any sim paid to an employee as bonus or Any sim paid to an employee as bonus or sim paid to an employee as bonus or paid to an employee as bonus or to an employee as bonus or an employee as bonus or employee as bonus or as bonus or bonus or orcommission forservicesrendered, where such sum wouldnot have been payable to him as profits ordividend if it hadnot been paid as bonus or commission : «10 (2) (x): Any sim paid to an employee as bonus or (2) (x): Any sim paid to an employee as bonus or (x): Any sim paid to an employee as bonus or Any sim paid to an employee as bonus or sim paid to an employee as bonus or paid to an employee as bonus or to an employee as bonus or an employee as bonus or employee as bonus or as bonus or bonus or or Provided that the amount ofthe bonus or commissionis of a reasonable amount with reference to— (a) the pay of the employee and the conditions of his service; (b) the profits of the business, profession or vocationfor the year in question; and «fed3 ag ga oat A aaa F— “10(2) (x): Det Ht als A saad st Taz zr sy ay sar% faa dara ediga} wa Aa) aka,atc ale ae uly aaaa adigak ea hadat gaad, sam ata wate 3s oF aa 4 ela : qed Naa at saga st ae farafefaa st eae gc afaga uf a— (a) sua sr aa Me Tari Bar at wa; Section 10(2)(x) and 10(2)(xv) of the Income Tax Act. 1922 at the relevant time read as follows : "10(2) (x) : any sum paid to an employee as bonus E or commission for services rendered, where such sum would not have been payable to' him as profits or dividend if it had not been paid as bonus or commis-sion: Provided that the amount of the bonus or com-mission is of a reasonable amount with reference to--F (a) the pay of the 1employee and the conditions of his service; ( c) the general practice in similar business profes-sion or vocations; 10(2) (xv) : Any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly or exclusively for the purpose of such business, profession or voca-tion." It was contended on behalf of the assessee that in the circum-stances of this case the amount of Rs. 37,733 paid to Shri J. P. (@) agama ag % fae ear, gfe ay eqaena % ATH; BE Ho Fo mea tego quia sas Byra, So To [Fate TAAtaY) 137 or vocation;(c) the general practice in similar business, profession 10(2) (xv)saa #1 Dal AL car (MT Cela 3am at safeamt al caf at aa) a Ts era, aha ar saa F slat Fsfag qulaar ay saeraal UME me Yar saa Fl TE eT |”BAofaqo qo 10-18 [1969] l eqefaoqe Yaish was an amount laid out or expended wholly or exclusively for the purpose of the business of the assessce and was wrongly disallowed by the Income Tax Appellate Tribunal. It ~as pointed out that Shri J. P. Yaish was in no way related to the proprietors of the firm and the commission on profits clause was inserted to create the interest of Shri J. P. Yaish in the running of the mil! which was "old and unbalanced" and had never worked continuously or satisfactorily before it was taken over by the ass=. During the first 14 months the mills made no profit and Shri J. P. Yaish was paid nothing beyond his salary and car allowance. In tjle next 12 months he succeeded in securing an order for Lohis from Government and so the mill made some profit and the amount of the Manager's commission was pro-portionately very small in terms of the agreement. The large profit in 1946-4 7 was made due to new design of civilian rugs Shri Yaish introduced for the first tima in the mill after studying public tastes and the qualities and designs prevailing in the market. It was also said that Shri Yaish had a special aptitude to show in his work so far as the marketability of the goods was concerned. After the death of Shri Vaish in July 1947, the finn was converted into a company and the post of the General Manager was abolished and one of the Directors who managed the affairs of the company was given Rs. 18,000 per annum as remuneration and Rs. 6,000 per annum as allowance for the accounting year 1947-48. The Appellate Tribunal took the view that the post of General Manager carried the responsibility equal to that of the Director who was given the charge of the conduct of business after the death of Shri Yaish, the General Manager. This post carried a remuneration of Rs. 18,000 plus Rs. 6,000, i.e., a total remuneration of Rs. 24,000 per annum and therefore the commission paid to Shri Yaish in excess of thiS amount was not really paid wholly for the purpose of carrying on busines<. But it was pointed out on behalf of the assessce that Shri J. P. Yaish had taken over the mill at a time when it was old and dilapidated and in the first 14 months the mill made no profit and Shri Yaish was paid nothing beyond the salary and car allowance. In the succeeding year he was able to secure an order from the Government on account of which the inill made some profit. Shri Yaish introduced for the first time a new design of civilian rugs in the year 1946-47 during which a large profit was made. Jt was therefore contended on behalf of the assessce that the posi-tion of Shri Yaish who worked in the mill at the initial stage and of the Managing-Director was ncit comparable and the Appellate Tribunal was wrong in taking this circumstance into consideration. Counsel for tl!e assessce also pojnted out that Shri Yaish w·a~ educated in a Public School at Dehra Dun and thereafter studied at the Benara~ College and at the Engineering College of the Benaras Hindu University for Electrical and Mechanical Engi- A neering and then joined the Co=erce College at Delhi. After that he had training in the Aluminium Corporation of India Ltd., Lakshmi Rattan Cotton Mills Ltd. and the Road Products Ltd., Rampur. In view of the circumstances of the case it was urged on behalf of the assessee that the ·entire amount of Rs. 75,465 paid to Shri Yaish was an amount laid out wholly and exclusively B for the purpose of the business of the assessee within the meaning of s. 10(2)(xv) of the Income Tax Act, 1922. cists off ao 24,000 wad a site cafe oh Seat ca wee a waeaaa Tals Ia: HA BUA s oatea Fs faa gd quan deawm ala}| fea fralfedd a ae 8 ae afta fear mar fe of Mo Mo aq a fraBATTant cam Se leg aaa Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat stant cam Se leg aaa Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st cam Se leg aaa Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st Se leg aaa Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st leg aaa Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st aaa Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st Helat der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st der afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st afe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat stfe fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st fee 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st 8 YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st YE ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st ana ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st ary ae ael gut em she sAd-gigl she of Se St aaa wea Hat st ae ael gut em she sAd-gigl she of Se St aaa wea Hat st ael gut em she sAd-gigl she of Se St aaa wea Hat st gut em she sAd-gigl she of Se St aaa wea Hat st em she sAd-gigl she of Se St aaa wea Hat st she sAd-gigl she of Se St aaa wea Hat st she of Se St aaa wea Hat st of Se St aaa wea Hat st Se St aaa wea Hat st St aaa wea Hat st aaa wea Hat st wea Hat st Hat st stBIC ad 4 wea GHad ar nar| sak ae He ayT ae aweUE HSC Ma eA A awe a aa feet fea ® gq arr gar} ot Gea79 1946-47 Sua agauq adser Radke sae aaa We saay Fea Ga EM | wa: Paid a} ste @ ae aaa dak Hosesfafa @, fargia far & onus ana a art fear ar, saea-fdes at fiaat daa al at st aad att ale mfaaeq 2 Der sch ye al | HaltedBl Me a ae wl aaa mare ol Ge A euga Sas wae Te F feaara a) et ate aeagaa aga sare fee Ayaferaa % arte eras ategellsafia sifea & galegee cd Belge x shfafin a fe mea a szfee Rea srs safes A ea far | aaa TR teadiar wePara se efter fafats, aici sia fea falate dhe de Meazafafmés, cage 4 sfraq ora far |fratftel a ane 8 ag aa Rar varHime a afifevfadt SrFed geod sa ak 75,465 waa wagUHH TeEY 27a Vaz, 1922 a} gar 10(2\(xv) B waleata frafieat &maw & sale % fee qaaat at waeaaa aut as wa A |2aH ag ee wt Rar afer fea aAa A et ae AARaa ad sea fs ort sifra 8 faa gfeer aata genm Baa Baz, 1922 |} arr 10(2) (x) & wala fear sae gata ae HT Beat ata adt|at oza wieay + frets fear she feast seat asq aaa? Rarag a Raesfalaa at a0 (2)(xv) } ada a fe ae 10(2)(x) % aaaAL So de ae at daca cae H arrat gaat any S ay BH ar He?|ag ora, fe gar MS afer fad aay aA IR ar craT feat aT a gaata BAI Ha. Zhe at sqaara % gases fea dams aaa st az?sat f gan Sea az, 1922 at ae 10 (2) (xv) Fo wfaa 2, sew aefatraca oh ofefeufa a Fea eo fafateea fen stat aEL | Peg Keaaa TEN Flea face aeqay fafate waa sae MI, eTnaer(*) # eae fear ay fe feet aa at wadaar ar aaa Read area Tefafas aga 2 i aed AIA8 age sgh (ada) ae ala wae, Data|raat sfeat % xa aa at adage et Rar fH of Ser a Al ad saligra a az Vasu GuptaAdvocate We should make it clear that in this case we are not called upon to decide whether the Income Tax Officer could exercise the power he exercised under s. 10 ( 2) ( x) of the Income Tax Act The question referred by the Tribunal and answered by the High c Court only deals with the claim of deduction of the amount paid to Shri J. P. Yaish under s. 10(2) (xv) and not under s. 10_(2) (x) of the Act. The question as to whether an amount claimed as expenditure was laid out or expended wholly or exclusively for the purpose of business, profession or vocation as required under s. 10(2) (__xv) D of the Income Tax Act has to be decided on the facts and in the light of the circumstances of each particular case. B'ut; as observed by this Court in Swadeshi Cotton Mills Co. Ltd. v. C.l.T., U.P. ('), the final conclusion on the admissibility of an allowance is one of law. In the present case, both the Appellate Assistant Commissioner and the Appellate Tribunal rejected the E view of the Income Tax Officer that the rate of co=ission paid to Shri Yaish was not fixed on account of business considerations but there was some collateral reason. But considering the prac-tice in similar business concerns, the Appellate Assistant Com-missioner expressed the view that the rate of 12-!:% co=ission was reasonable and the allowance was therefore restricted to half F of the amount claimed by the assessee. The view of the Appel-late Assistant Commissioner has been affirmed by the Income Tax Appellate Tribunal. The case of the assessee, however, is that a higher rate of co=ission of 25% was fixed for Shri J. P. Yaish because the mill was ol