https://www.taxtmi.com/caselaws?id=168793 Payments made by managing agents to third parties under binding pre-acquisition agreements were not deductible as business expenditure. Although the commission from the principal formed part of business receipts, the obligation to pass on a quarter of it was a condition of acquiring the agency business and the right to earn profits, not an outlay incurred in the actual process of earning them. The liability existed even if the business made a loss, and it was not payment for goods, services, or transactions in the conduct of the business. On the proper commercial test, the sums were not working expenses laid out solely for profit earning, so deduction was disallowed. en-us Fri, 12 Mar 1937 00:00:00 +0530 Thu, 26 Mar 2015 17:03:54 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=168793 Payments made by managing agents to third parties under binding pre-acquisition agreements were not deductible as business expenditure. Although the commission from the principal formed part of business receipts, the obligation to pass on a quarter of it was a condition of acquiring the agency business and the right to earn profits, not an outlay incurred in the actual process of earning them. The liability existed even if the business made a loss, and it was not payment for goods, services, or transactions in the conduct of the business. On the proper commercial test, the sums were not working expenses laid out solely for profit earning, so deduction was disallowed. Case-Laws Income Tax Fri, 12 Mar 1937 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=168793