HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Commissioner of Income-tax, Bombay v. Chandulal Keshavlal & Co., Petlad
Civil Appeal No. 167 of 1958
[1960] 3 SCR 38 ·
Indian Income-tax Act, 1922, section 10(2)(xv)
Sources & disclosures includedDownload original judgment / order
3-judge bench · S. K. Das · J. L. Kapur · M. Hidayatullah
01 · Facts of the case
Managing agent accepted Rs 1 lakh of Rs 3,09,114 commission for accounting year 1950, relinquishing Rs 2,09,114 at managed company directors’ request to strengthen its finances. Tribunal treated full commission as accrued but allowed relinquished amount as business expenditure.
Source: Primary report: SCR 39–43
02 · Discussion by the Hon’ble Court
Commercial expediency is tested from assessee’s business perspective. Voluntary expenditure and indirect benefit can qualify although another entity also benefits. Expenditure solely fostering another business, profit distribution, bounty or improper purpose does not qualify. Tribunal’s supported factual finding governs.
Source: Primary report: SCR 43–49
03 · Judicial decision
Evidence supported Tribunal’s finding that remission strengthened the managed company and thereby benefited managing agent’s linked commission business; deduction under section 10(2)(xv) allowed.
Source: Primary report: SCR 49–50
04 · Outcome / in whose favour
Revenue appeal dismissed with costs; High Court decision sustained.
Source: Primary report: SCR 50
05 · AKHB REVIEW POINT
Keep this post-accrual deduction analysis distinct from adjacent Harivallabhdas pre-accrual contract variation case. Record business nexus and supporting evidence; third-party benefit alone neither grants nor defeats deduction.
Source: Primary report: SCR 40, 48–50
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
Historical legislation expressly identified in this note. This is not a decision under the Income-tax Act, 1961 or the Income-tax Act, 2025. Verify enacted wording, commencement, transition and subsequent judicial treatment independently before modern reliance.
Later treatment
Source checked 2026-10-23. Subsequent treatment and present-law applicability have not been comprehensively checked.
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General legal and tax research only; not legal or tax advice. Verify the complete judgment, applicable statutory version and subsequent treatment before reliance. AKHB REVIEW POINT is editorial analysis, not the Court’s holding.