https://www.taxtmi.com/caselaws?id=284012 Whether payments of 121/2% of net profits to two managers constituted reasonable remuneration under the proviso to section 10(2)(x) was assessed by applying the proviso's tests: employee pay and service conditions, the year's business profits, and general practice in similar businesses. The correct standard is commercial expediency judged from a prudent business viewpoint, not the assessing authority's subjective standard. Relevant factors - genuineness of agreements, incentive alignment, timing at the year's commencement, salary stabilisation with profit-linked commission, and absence of contrary comparators - support reasonableness. Outcome: the commission payments are deductible in favour of the assessee. en-us Mon, 27 Aug 1956 00:00:00 +0530 Wed, 23 Oct 2019 15:43:17 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=284012 Whether payments of 121/2% of net profits to two managers constituted reasonable remuneration under the proviso to section 10(2)(x) was assessed by applying the proviso's tests: employee pay and service conditions, the year's business profits, and general practice in similar businesses. The correct standard is commercial expediency judged from a prudent business viewpoint, not the assessing authority's subjective standard. Relevant factors - genuineness of agreements, incentive alignment, timing at the year's commencement, salary stabilisation with profit-linked commission, and absence of contrary comparators - support reasonableness. Outcome: the commission payments are deductible in favour of the assessee. Case-Laws Income Tax Mon, 27 Aug 1956 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=284012