Judgment :- RAJAGOPALAN, J. The question for decision is : "Whether on the facts and in the circumstances of the case, the applicant was entitled to the deduction of Rs. 5,127 in the assessment year 1945-46 and Rs. 4,742 in the assessment year 1946-47 under Section 10(2)(xv) of the Indian Income-tax Act." * The facts were not really in dispute even before the Appellate Income-tax Tribunal. The Tribunal reported : --- "It was admitted that the agreement on the basis of which the payments had been made was only oral, and that Karuppan Chettiar did not do anything for the business, apart from helping in securing the licence which enabled the assessee to export cloth to Ceylon. That there was such an agreement to pay Karuppan Chettiar, that Karuppan Chettiar helped him in obtaining a licence and that Karuppan Chettiar was paid the sums referred to above were not in dispute before the Tribunal." * Learned counsel for the applicant pointed out that the assessee who was trading in piecegoods was exporting goods to Ceylon in the past, one of the importers in Ceylon being Karuppan Chettiar himself. During the assessment years, however, it was necessary to obtain an import licence in Ceylon. The further case of the assessee was that without the help of Karuppan Chettiar, i.e., without the accounts he produced to prove that, in the past, the assessee had been exporting piecegoods to Ceylon to persons including Karuppan Chettiar, it would not have been possible for the assessee to obtain that import licence. The assessee applied for the licence, Karuppan Chettiar produced the evidence, and the assessee obtained the licence. It was for these services that the assessee entered into the agreement with Karuppan Chettiar, to give him as his commission half of the profits on the transactions, i.e., exports to Ceylon. The exports in the assessment years were partly to Karuppan Chettiar himself and parly to othersUnder Section 10(2)(xv) of the Income-tax Act, any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purposes of such business, profession or vocation can be excluded. The exports in the assessment years were partly to Karuppan Chettiar himself and parly to othersUnder Section 10(2)(xv) of the Income-tax Act, any expenditure (not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purposes of such business, profession or vocation can be excluded. It is for the assessee applicant to show that the expenditure he incurred by payment to Karuppan Chettiar in the two years of assessment was expenditure which was not only not in the nature of capital expenditure but was expenditure " laid out or expended wholly and exclusively for the purposes of such business. " The agreement between Karuppan Chettiar and the assessee was oral. The terms thereof were not clear ; but it was conceded before the Income-tax authorities including the Income-tax Appellate Tribanal that it was out of the profits arising from the export business to Ceylon that Karuppan Chettiar was to be paid, the payment being half of those profits. No doubt learned counsel for the assessee drew our attention to the entries in the account books, which showed the payment to Karuppan Chettiar as commission. It was again shown as commission and as an expenditure incurred in the final profit and loss account which the assessee cast. But on the statement of the assessee himself, in form and in substance, apart from the description as commission, it was really a case of division of profits. It was not a question of capital expenditure. It was not a question of money expended wholly and exclusively for the purpose of the business which the assessee carried on. The " pattials " which the assessee as an exporter sent to the importers in Ceylon gave the price, which included the assessee's margin of profit. There were three pattials in one year and four pattials in another which exhaushed the quota available to the assessee for export to Ceylon. On that business for the assessment year having been concluded, the amount realised as profits on each of the transactions during the year was ascertained, and half of it was credited to Karuppan Chettiar in the assessee's books, and that was again shown as an item of expenditure in the final profit and loss account of the assessee. On that business for the assessment year having been concluded, the amount realised as profits on each of the transactions during the year was ascertained, and half of it was credited to Karuppan Chettiar in the assessee's books, and that was again shown as an item of expenditure in the final profit and loss account of the assessee. That did not, however, prevent its being a case of division of profits, profits already ascertained with reference to the export business, i.e., an item of the assessee's business involved in the export of goods to Ceylon. As we said before, it was really in form and in substance a division of ascertained profits, and as such the assessee was rightly held not to be entitled to any deduction for income-tax. Section 10(2)(xv) does not apply to these two items of expenditure, and that is our answer to the question. As the assessee has failes he must pay the costs of the Commissioner of Income-tax which we fix at Rs. 250Reference answered accordingly.