Revenue expenditure for securing sales orders remained deductible where no enduring advantage or monopoly right was obtained.

Commission paid to an agent in Japan for securing coal supply contracts was held to be revenue expenditure allowable as a deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922. The payment was made in the ordinary course of the assessee's coal business to obtain sales orders, and the rate of commission was found to accord with normal commercial practice. No monopoly right, exclusive privilege, or enduring advantage was acquired; the fact that the assessee entered a new market and paid a high commission did not alter the trading character of the outlay. The expenditure formed part of the profit-earning process and was allowed as a deduction.

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Issues: Whether the commission paid to the assessee's agent in Japan for securing coal supply contracts was allowable as a deduction under section 10(2)(xv) of the Indian Income-tax Act, 1922.

Analysis: The commission was paid in connection with obtaining sales orders in the ordinary course of the assessee's coal business. The Tribunal's finding that the rate of commission was in accord with normal commercial practice was accepted. The expenditure did not secure any monopoly right, exclusive privilege, or other enduring advantage. The amount of expenditure and the fact that the assessee entered a new market did not change its character, because the payment remained incidental to the trading operations and formed part of the profit-earning process. The authorities relied on by the revenue were distinguished as involving enduring assets, monopoly rights, or concessions of a different kind.

Conclusion: The commission expenditure was a revenue outgoing allowable as a deduction, and the question was answered in the affirmative in favour of the assessee.

Ratio Decidendi: Expenditure incurred wholly and exclusively for securing sales in the ordinary course of business, without obtaining any enduring advantage, is allowable as revenue expenditure even if paid at a high rate in a new market.

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