J.K. WOOLLEN MANUFACTURERS vs COMMISSIONER OF INCOME-TAX, U.P.

The Supreme Court held that under Section 10(2)(xv) of the Income-tax Act, the commission paid to an employee must be considered as an expenditure laid out wholly and exclusively for the purpose of business. The Court emphasized that the reasonableness of such expenditure should be judged from the perspective of the businessman, not the Income-tax Department. The Court ruled that the entire amount paid to the General Manager was deductible, overturning the lower authorities' disallowance of the higher commission rate based on the firm's profitability.