Commission paid to an employee requires proof of exclusive business purpose; disallowance upheld for lack of evidence.

Commission paid to an employee was treated as falling within the specific commission provision, whether contractual or voluntary, and could also be examined under the residuary business expenditure rule. The assessee had to prove that the payment was laid out wholly and exclusively for business purposes. In testing that claim, the Court treated reasonableness, the employee's qualifications and services, trade practice, the amount paid, and surrounding commercial circumstances as relevant factors. On the evidence, the assessee failed to establish that the full commission met that test, so the disallowance of the expenditure was upheld.

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Issues: Whether the commission paid to the general manager was deductible as business expenditure, and whether the allowance was to be judged under the provision dealing specifically with commission or under the residuary business expenditure provision.

Analysis: Commission paid to an employee was held to fall within the specific provision dealing with commission, whether contractual or voluntary, and the general residuary provision did not exclude consideration of such payment altogether on the facts of the case. Even under the residuary provision, the assessee had the burden of proving that the expenditure was laid out wholly and exclusively for the purposes of the business. The Court held that reasonableness, the qualifications and services of the employee, the practice in the trade, the quantum paid, and the surrounding commercial circumstances were relevant factors in testing whether the expenditure was genuinely incurred for business purposes. On the evidence, the authorities were justified in holding that the assessee had not proved that the whole of the commission was incurred wholly and exclusively for business.

Conclusion: The commission was not fully allowable as business expenditure. The disallowance was upheld and the answer was against the assessee.

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