HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, West Bengal v. Calcutta Agency Ltd.
Civil Appeal No. 59 of 1950
[1950] SCR 1008 ·
Indian Income-tax Act 1922 sections 10(2)(xv), 66
Sources & disclosures includedDownload original judgment / order
Three-judge bench · Harilal Kania C.J. · M. Patanjali Sastri J. · S.R. Das J.
01 · Facts of the case
Calcutta Agency managed Basanti Cotton Mills. After hundis drawn by a director produced litigation, it agreed to reimburse the Mills through deductions from its commission. It claimed Rs 22,500 as business expenditure. The Tribunal rejected the claim. On reference, the High Court accepted counsel’s assertion that payment avoided scandal and preserved the managing agency, although those purposes had not been found as facts by the Tribunal.
02 · Discussion by the Hon’ble Court
The assessee bore the burden of establishing facts supporting the deduction. In the historical reference jurisdiction, the High Court had to answer legal questions on the Tribunal’s facts, subject to a successful no-evidence challenge; it was not a fresh fact-finder. The parties had accepted the stated case. Arguments about avoiding exposure and preserving business could not be substituted for factual findings. The factual basis needed to invoke Mitchell v. B. W. Noble had never been proved.
03 · Judicial decision
The Revenue’s appeal was allowed with costs in the Supreme Court and High Court. Deduction under section 10(2)(xv) failed because the necessary supporting facts had not been established at any stage.
04 · Outcome / in whose favour
Revenue; claimed expenditure deduction refused on failure of proof.
05 · AKHB REVIEW POINT
Build the evidence for business purpose before relying on a favourable precedent. Keep counsel’s submissions separate from adjudicated facts, and address any factual omission in the stated record through the permitted procedure. Do not convert this proof-based result into a universal rule that every settlement payment or discharge of debt is capital or non-deductible.
Source & verification
Download original judgment / order · Open cited source rendition
SCR 1008–1018; all 11 PDF pages read. The preceding Pannalal Jankidas ending on page 1 is excluded.
Statutory scope
Historical Indian Income-tax Act, 1922 only; no present statutory equivalence or current-law clearance is asserted.
Later treatment
Source checked 2026-10-18. Subsequent treatment and current-law applicability have not been comprehensively checked.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from an identified primary report. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court’s holding. No current-law clearance is claimed.