It was further contended for the commissioner that if this conclusion should be reached, expenditure in redeeming such reversionary certificates is not an allowable deduction, because it is a payment out of net profits after they have been ascertained and the directors have determined to divide them. Reliance was placed upon Commissioner of Taxation (W.A.) v. Boulder Perseverance Ltd. [3] , and A. W. Walker & Co. v. Inland Revenue Commissioners [4] . In my opinion these cases do not require the conclusion that a payment of interest on money borrowed for the purposes of a business, when the contract under which it is payable makes the profits of the business the exclusive source for its payment, is to be held on that account not to be an allowable deduction under s. 51. If, as is the case here, in my opinion, interest is an outgoing incurred in producing the assessable income, it cannot with consistency be said to be payable out of taxable income. To say that it is payable out of profits or even out of net profits, is not to say that it is payable out of taxable income. Confusion may easily arise from cases dealing with the question whether particular payments are to be regarded as made in the course of ascertaining profits or out of profits when ascertained, because of the different senses in which the "profits" may be used. In this case, for instance, counsel for the Commissioner referred to the statement of the Privy Council in Pondicherry Railway Co. v. Commissioner of Income Tax, Madras, [5] , that "a payment out of profits and conditional on profits being earned cannot accurately be described as a payment made to earn profits. It assumes that profits have first come into existence. But profits on their coming into existence attract tax at that point, and the revenue is not concerned with the subsequent application of the profits". But, as Lord Greene M.R. pointed out in British Sugar Manufacturers Ltd. v. Harris [6] , the word "profits"was there used in the sense of "real net profits"; and the statement is inapplicable to a case where the relevant question is whether the payments were incurred in producing, not real net profits (which may approximate to taxable income), but assessable income which by definition includes gross income (s. 25). The effect of the indenture of 1911 is that the reversionary certificates are redeemable out of profits ascertained without allowing for the expenditure involved in such redemption; and those profits are not taxable income, but consist of assessable income less certain deductions only. The British Sugar Manufacturers Case [1] tends strongly to support the contention of the company in the present case, and in my opinion the proper conclusion is that the moneys expended in redeeming reversionary certificates which were issued to holders of six per cent. cumulative income debenture stock are an allowable deduction under s. 51.