Reasonable estimation of commission expenses permits a higher deduction where records are incomplete but business costs are evident.

Where commission-related expenditure is not fully supported by documentary evidence, the deduction may be estimated on a reasonable basis rather than restricted to the claimed amount or a nominal percentage. The notes state that substantial commission activity necessarily entails assistance, administrative and incidental costs; considering the taxpayer's age, the scale of activity and cash withdrawals, a 10% estimate was inadequate. Deductible expenditure was therefore estimated at 20% of gross commission receipts, with income to be recomputed accordingly.

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Issues: Whether expenditure deductible from gross commission receipts should be restricted to 10% or estimated at a higher amount where the claimed expenditure was not fully supported by documentary evidence.

Analysis: The entire expenditure claim could not be accepted solely on the assessee's assertions because supporting evidence was unavailable. However, earning substantial commission income necessarily involved expenditure towards assistance, administrative requirements and incidental activities. Having regard to the assessee's advanced age, the nature and magnitude of the commission activity, and the available cash withdrawals, the 10% estimate was considered inadequate. A reasonable estimate of 20% of the gross commission receipts was warranted.

Conclusion: Deductible expenditure was estimated at 20% of the gross commission receipts, amounting to Rs. 1,93,770, and the income was directed to be recomputed accordingly; the issue was decided partly in favour of the assessee.

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