Commercial expediency in business deductions raises a mixed question of fact and law, not a pure finding of fact.

Deductibility under a business-expense provision requires application of the statutory test to the facts, so the issue is not a pure question of fact. The meaning of "expenditure laid out or expended wholly and exclusively for the purpose of such business" is a question of law, and whether an item was incurred on grounds of commercial expediency is a mixed question of fact and law. On that basis, the refusal to treat the deduction issue as referable in law was incorrect, because a legal question arose from the Tribunal's findings.

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Issues: Whether the High Court was right in holding that no question of law arose from the Tribunal's order on the assessee's claim for deduction of the debit-note amount under section 10(2)(xv), and whether the Tribunal's conclusion on commercial expediency was a pure finding of fact.

Analysis: The claim for deduction under section 10(2)(xv) required determination of the facts, followed by application of the correct legal test to those facts. The construction of the statutory phrase "expenditure laid out or expended wholly and exclusively for the purpose of such business" is a matter of law, and the final decision on deductibility is not a pure question of fact. The issue whether expenditure was incurred on grounds of commercial expediency therefore involves a mixed question of fact and law. The Tribunal's finding that the debit note was accepted for commercial expediency did not exclude the existence of a referable question of law.

Conclusion: The High Court erred in refusing a reference under section 66(2). The question whether the sum of Rs. 46,582 was a permissible deduction under section 10(2)(xv) was a referable question of law arising from a mixed question of fact and law.

Final Conclusion: The matter was sent back for the High Court to obtain a statement of case from the Tribunal and decide the reference according to law.

Ratio Decidendi: Whether expenditure is deductible under a provision requiring it to be laid out wholly and exclusively for business purpose is a mixed question of fact and law, because the legal meaning of the statutory test must be applied to the facts found.

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