HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
J. K. Woollen Manufacturers v. Commissioner of Income-tax, U.P.
Civil Appeal No. 591 of 1967
[1969] 1 SCR 525 ·
Indian Income-tax Act, 1922: sections 10(2)(x) and 10(2)(xv)
Sources & disclosures includedDownload original judgment / order
3-judge bench; unanimous judgment delivered by V. Ramaswami, J. · J. C. Shah, J. · V. Ramaswami, J. · A. N. Grover, J.
Assessment years: 1948-49
01 · Facts of the case
The woollen mill appointed J. P. Yaish as general manager on salary, allowance and profit-linked commission. After an initial loss and then modest profit, the mill earned enough for the agreed 25 per cent rate, producing Rs.75,465 commission for assessment year 1948-49. The officer allowed only Rs.5,000; the appellate authority raised the allowance to half, and the Tribunal compared Yaish with a later director remunerated at Rs.24,000 annually. The High Court answered the section 10(2)(xv) reference against the assessee (SCR pp.525-528; PDF pp.1-4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
The Court confined itself to whether the payment was wholly and exclusively for business under section 10(2)(xv), not the officer’s power under section 10(2)(x). Commercial expediency had to be judged from the businessman’s viewpoint. Although the Tribunal could reject a payment as unreal, non-trading or non-business expenditure, it could not simply determine what remuneration it thought should have been paid. The manager’s qualifications, the mill’s prior condition, improved orders and new products supported the agreed commission (SCR pp.528-530; PDF pp.4-6).
Source: Primary judgment: discussion
03 · Judicial decision
The Court held that the entire Rs.75,465 was laid out wholly and exclusively for the assessee’s business, answered the question accordingly and allowed the appeal with costs (SCR p.530; PDF p.6).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of the assessee on the section 10(2)(xv) reference. The disallowed half of the genuine managerial commission was restored; section 10(2)(x) was not decided (SCR pp.529-530; PDF pp.5-6).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: distinguish a tax authority’s legitimate inquiry into genuineness and business purpose from substitution of its own remuneration scale. Document the commercial setting, employee capability and results, but treat the holding as fact-bound and preserve every separate statutory reasonableness test (based on SCR pp.528-530; PDF pp.4-6).
Source: Primary judgment: reviewPoint
Source & verification
Download original judgment / order · Open cited source rendition
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- The source verifies Civil Appeal No. 591 of 1967, the stated bench, issue, reasoning and operative result.
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Statutory scope
The decision applies section 10(2)(xv) of the repealed Indian Income-tax Act, 1922. The Court expressly did not decide the Income-tax Officer’s separate power under section 10(2)(x).
Later treatment
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