Business expenditure deduction upheld for agent commission backed by documents, tax records, and proof of genuine services.

Commission and service charges paid to agents were treated as allowable business expenditure under section 37(1) where the assessee substantiated the payments with bills, PAN details, account-payee cheques, tax deduction and deposit records, confirmations, and supporting purchase and export documents. The material showed that the agents assisted in arranging purchases and export-related business, and there was no evidence of routing back of funds or any related-party arrangement. In the absence of contrary evidence and with the books not rejected, mere suspicion by the Revenue was insufficient to disallow the claim. The expenditure was therefore regarded as genuine and wholly and exclusively incurred for business purposes.

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Issues: Whether the commission and service charges paid to the agents were allowable as business expenditure under section 37(1) of the Income-tax Act, 1961.

Analysis: The payments were supported by bills, PAN details, account-payee cheques, deduction and deposit of tax at source, confirmations in response to notices, and supporting purchase and export documents. The factual matrix showed that the agents rendered services in arranging purchases and export-related business arrangements, and there was no evidence that the money had been routed back to the assessee or that the recipients were related parties. The mere doubt raised by the Revenue, without contrary material, was insufficient to dislodge the claim where the expenditure was incurred in the course of business and the books were not rejected.

Conclusion: The commission expenditure was held to be a genuine business expense laid out wholly and exclusively for business purposes and was therefore allowable as a deduction.

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