SHAHZADA NAND & SONS vs THE COMMISSIONER OF INCOME TAX, PATIALA

The Supreme Court held that the commission of Rs. 45,380 paid by the appellants to their employees Saheb Dayal and Gurditta Mal was a deductible expenditure under Section 36(1)(ii) of the Income Tax Act. The Court clarified that Section 36(1)(ii) does not require proof of extra services rendered by employees for commission payments to be justified as allowable expenditures. The Court allowed the appeal, overturning the decisions of the Income Tax Officer, Appellate Assistant Commissioner, and the Tribunal, which had all denied the deduction based on a lack of evidence for additional services.