Business expense deduction fails where secret commissions lack evidence and are paid to obtain an unfair advantage.

Secret commission and business-promotion expenditure is deductible only where the taxpayer establishes, with recipient details and supporting records, that it was incurred wholly and exclusively for business. The notes state that absence of payee particulars, payment dates, payment mode, vouchers and other evidence prevents discharge of this primary burden. Opaque payments made to secure an unfair advantage are also described as falling within the statutory exclusion for expenditure incurred for an unlawful or prohibited purpose. Accordingly, the claimed expenditure was not deductible and the disallowance was sustained.

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Issues: Whether secret commission/business-promotion expenditure, unsupported by payee particulars and documentary evidence, is deductible as business expenditure.

Analysis: The assessee bore the primary burden of establishing that the expenditure was incurred wholly and exclusively for business. No basic particulars of the alleged recipients, dates, mode of payment, vouchers or supporting evidence were furnished. Further, secret payments made to obtain an unfair advantage, being opaque and contrary to normal business practice, fall within the statutory exclusion for expenditure incurred for an unlawful or prohibited purpose.

Conclusion: The claimed secret commission/business-promotion expenditure was not deductible; the disallowance was sustained against the assessee.

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