THE COMMISSIONER OF EXCESS PROFITS TAX, HYDERABAD vs M/S. S. R. V. G. PRESS COMPANY, KURNOOL

The Supreme Court held that under Rule 12, Schedule 1 of the Excess Profits Tax Act, 1940, the Excess Profits Tax Officer must assess the reasonableness and necessity of deductions claimed based on commercial expediency rather than legalistic considerations. The Court ruled that payments made for sales tax, as assessed by the Sales Tax Officer, are obligatory and necessary for business operations, thus qualifying as permissible deductions. The decision of the Andhra Pradesh High Court was upheld, affirming the right to deduct sales tax payments in excess profits tax assessments.