C.I.T., PUNJAB, HARYANA, J & K, H.P. & UNION TERRITORY OFCH vs PANIPAT WOOLLEN & GENERAL MILLS co. LTD.CHANDIGARH

The Supreme Court held that for a deduction to be permissible under Section 10(2)(xv) of the Income Tax Act, 1922, the expenditure must be incurred wholly and exclusively for the purpose of the business. The Court emphasized that the reasonableness of the expenditure should be assessed from the perspective of the businessman, not the Income Tax Department. The Court found that the agreement between the assessee and the selling agent constituted a joint venture rather than a simple agency, thus disallowing the claimed deductions as they did not meet the criteria under Section 10(2)(xv).