Commercial expediency test governs deductibility of genuine commission paid under an acted-upon selling agency arrangement.

Commission paid under a genuine and acted-upon selling agency arrangement was held to be deductible as business expenditure because it was laid out wholly and exclusively for business purposes. The agents were entitled to commission even on direct sales by the assessee, and their responsibilities included collection of payments and contractual performance, supporting the commercial reality of the arrangement. Prior allowance in earlier assessment years also reinforced bona fides. The Tribunal's findings were based on primary facts and factual inferences, which were not open to reappraisal in reference jurisdiction. The governing test was commercial expediency from the businessman's standpoint, and the payment was not shown to be sham or unreal.

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Issues: Whether the commission paid to the selling agents was allowable as a business expenditure as having been laid out wholly and exclusively for the purpose of the assessee's business.

Analysis: The agreement with the selling agents was genuine and had been acted upon. The agents were entitled to commission even where sales were effected directly by the assessee, and they also bore responsibility for payment collection and contractual performance. The allowance of the commission in earlier assessment years supported the bona fides of the arrangement. The Tribunal's conclusion rested on primary facts and factual inferences, which were not open to reappraisal by the High Court in reference jurisdiction. The test under section 10(2)(xv) is one of commercial expediency, judged from the businessman's point of view, and the payment was not shown to be a sham, unreal, or outside the character of trading expenditure.

Conclusion: The commission was allowable as expenditure laid out wholly and exclusively for the purpose of business, and the assessee succeeded.

Ratio Decidendi: In determining deductibility of business expenditure, commercial expediency must be judged from the businessman's standpoint, and bona fide commission paid under a genuine and acted-upon arrangement is allowable if it is shown to be wholly and exclusively for the business purpose.

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