BRITISH INDIA CORPORATION vs COMMISSIONER OF INCOME-TAX, U.P., LUCKNOW

The Supreme Court interpreted Rule 12(1) of Schedule I to the Excess Profits Tax Act, 1940, emphasizing that the determination of reasonable and necessary expenditure must consider commercial expediency and actual services rendered. The Court held that commissions based on excess profits, particularly during national emergencies, could be deemed unreasonable and unnecessary, justifying disallowance by the Excess Profits Tax Officer. Consequently, the Court upheld the disallowance of a portion of the commission attributable to excess profits, affirming the lower courts' decisions.