Judgment

RAMASWAMI, J.:- The appellant (hereinafter called the assessee ) carried on the business of manufacture and sale of blankets and other woollen cloth. For the assessment year 1948-49 the assessee claimed a deduction of Rs. 75,465 as commission paid to the General Manager Shri J. P. Vaish. According to the terms of appointment Shri J. P. Vaish was to draw a fixed salary of Rs, 1,000 p.m., commission of 12 1/2 per cent on the net profits of the firm payable after the accounts had been ascertained fully by the auditors and a car allowance of Rs. 250 p.m. It was one of the terms of the appointment that in case the profits exceed Rs. 1 lakh the commission payable to Shri J. P. Vaish was 25 per cent. Shri J. P. Vaish was also given medical facility for himself and the members of his family. In terms of the letter of appointment Shri Vaish got no commission in the first year as the mill suffered a loss. In the next year the profit being less than Rs. 1 lakh, Shri Vaish received a sum of Rs. 4,063 as commission. For the assessment year 1948-49, the assessee paid a sum of Rs. 75,465 as commission to Shri J. P. Vaish calculated at the rate of 25 per cent on the profits. The assessee