Revenue deduction for commitment charges and excess gratuity upheld where both were treated as business expenditure.

Commitment charges paid to financial institutions were deductible as revenue expenditure because borrowing was incidental to business and the payment secured temporary use of funds without creating an enduring asset; the deduction was allowed. Excess gratuity paid to monthly wage earners beyond the Gratuity Act limits was also deductible where it was treated as expenditure under company rules and had been accepted in earlier years; the deduction was allowed. No substantial question of law arose, and the revenue appeal failed in full.

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Issues: (i) Whether commitment charges paid to financial institutions were deductible as revenue expenditure. (ii) Whether gratuity paid in excess of the limits prescribed by the Gratuity Act was an allowable deduction.

Issue (i): Whether commitment charges paid to financial institutions were deductible as revenue expenditure.

Analysis: Borrowing was incidental to the carrying on of business, and expenditure incurred for securing the use of money for a certain period did not create an asset or advantage of enduring nature. The principle governing deduction of such expenditure was applicable on the facts, and the point had also been decided in favour of the assessee in earlier assessment years.

Conclusion: The commitment charges were allowable as revenue expenditure, in favour of the assessee.

Issue (ii): Whether gratuity paid in excess of the limits prescribed by the Gratuity Act was an allowable deduction.

Analysis: Additional gratuity paid to monthly wage earners was treated as expenditure under the company rules, and the Department had allowed similar deduction in earlier assessment years. On that basis, the excess gratuity payment was held to be deductible.

Conclusion: The excess gratuity payment was an allowable deduction, in favour of the assessee.

Final Conclusion: No substantial question of law arose, and the revenue appeal failed in full.

Ratio Decidendi: Expenditure incurred for borrowing money may be revenue expenditure where it is incidental to business and does not bring into existence an enduring asset or advantage, and additional gratuity paid under the company's terms to employees may also be deductible where it is treated as business expenditure.

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