Business income versus salary test favoured Revenue where commission, advice, and bad-debt risk showed independent trade.

Receipts consisting of commission for securing orders and advising on marketable goods, together with an amount for guaranteeing bad debts, were held to be business income rather than salary. The Court applied the control test and found that the assessee was not acting as a servant under the mills' control but was carrying on an independent commercial venture, assuming personal liability for bad debts and bearing the risk of profit or loss. Those features were inconsistent with an employment relationship. The receipts were therefore profits from business within Section 2(5) of the Excess Profits Tax Act, and the reference was answered in favour of the Revenue.

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Issues: Whether the assessee's receipts from the mills were profits from business within the meaning of Section 2(5) of the Excess Profits Tax Act, or salary from employment.

Analysis: The receipts had two components: a commission for securing orders and advising on marketable goods, and an additional amount for guaranteeing bad debts. The Court applied the test whether the assessee was working as a servant under the control of the mills or carrying on an independent venture. The material showed that the assessee secured orders, advised on commercial matters, took on personal liability for bad debts, and bore the risk of profit or loss. These features were inconsistent with a mere salary relationship and pointed to an independent commercial venture in the nature of trade.

Conclusion: The receipts were income from business and not salary, and the question referred was answered in the affirmative in favour of the Revenue.

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