Sales incentive deduction denied where expenditure lacked business nexus and appeared to be a profit-sharing arrangement.

A sales-incentive claim was disallowed because the assessee failed to establish a business nexus for the expenditure. The court accepted the factual finding that the distribution of articles was confined to members and ex-members, was not shown to depend on purchases by recipients, and appeared to be a mode of sharing business profits rather than a genuine business incentive. The amount was therefore not proved to have been incurred wholly and exclusively for the purposes of the assessee's business and was not deductible.

---

---

Issues: Whether the amount debited as sales incentive to customers was an expenditure incurred wholly and exclusively for the assessee's business and therefore deductible.

Analysis: The claim was disallowed on the footing that the distribution of articles was confined to members and ex-members, was not shown to depend on purchases made by recipients, and, on the materials placed, appeared to be a mode of sharing the business profits rather than a genuine sales incentive. The factual finding of the Tribunal was that the assessee failed to establish any business nexus for the expenditure.

Conclusion: The expenditure was not proved to have been incurred wholly and exclusively for the purposes of the assessee's business and was not deductible.

---