Business expenditure includes tax return preparation and assessment-related representation when incurred on commercial expediency and for business conduct.

Business expenditure covers more than expenses directly earning profits: where costs are reasonably incurred on commercial expediency to facilitate the carrying on of the business, they may fall within the statutory allowance even if connected with assessment proceedings. Expenses for preparing income-tax returns and for representation before the Income-tax Officer and in appeals to the Tribunal were treated as sufficiently connected with business conduct, absent mala fides, concealment, evasion, or unreasonableness. Such expenditure was therefore allowable in computing the assessee's income.

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Issues: Whether expenses incurred for preparing income-tax returns and for representation before the Income-tax Officer and in appeals to the Tribunal were admissible as deductions in computing the assessee's income under the business expenditure provision.

Analysis: The expression "for the purpose of the business" was held to be wider than earning profits alone. Expenditure reasonably incurred in connection with assessment proceedings and appeals was treated as connected with the conduct of business where it was incurred on grounds of commercial expediency and to facilitate the carrying on of the business, even if it did not directly generate income. The Court preferred the view that such expenditure, in a normal case and absent any allegation of mala fides, concealment, evasion, or unreasonableness, falls within the statutory allowance for business expenditure.

Conclusion: The expenditure on preparation of returns, appearance before the Income-tax Officer, and conduct of appeals was allowable as business expenditure and was admissible in computing the assessee's income.

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