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Issues:
Assessment of deduction for brokerage expenditure claimed by the assessee under S. 10(2)(xv) of the Income-tax Act, 1922. Analysis: 1. The judgment pertains to the assessment year 1960-61 where the assessee, a partnership firm, claimed a deduction for brokerage expenditure incurred. The Appellate Assistant Commissioner disallowed part of the claimed amount, considering it excessive at 40% of the profit. The question referred was whether the disallowance of a specific amount of commission paid to four agents was justified. 2. The court clarified that the four persons were agents, not employees, and analyzed the deduction under S. 10(2)(xv) of the Income-tax Act, focusing on the reality and purpose of the expenditure. It emphasized that once the reality and purpose of the expenditure for business are established, the assessee is entitled to the deduction without further scrutiny on the reasonableness of the amount. 3. Referring to a previous case, the court highlighted that taxing authorities lack jurisdiction to assess the reasonableness of the expenditure under S. 10(2)(xv). In this case, the Revenue had not found that the claimed amount was not wholly and exclusively for the business purpose, leading to the conclusion that the deduction should have been allowed in full. 4. The court noted that the agreement for payment of remuneration to agents was in writing, specifying the terms of payment per article sold. The Appellate Assistant Commissioner's disallowance based on perceived excessiveness was deemed impermissible, as the critical factors for deduction were the actual payment and the business purpose, not the reasonableness of the amount. 5. Ultimately, the court ruled in favor of the assessee, emphasizing that if the payment to agents was factual and for the business purpose, the deduction should be allowed without further scrutiny on the quantum. The Tribunal was directed to reexamine the appeal in light of the judgment.
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