JUDGMENT CHITRA VENKATARAMAN, J 1. The assessee is on appeal as against the order of the Tribunal relating to the assessment year 1994-95, raising the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the sum of Rs.17,16,619/- being the refundable contingency deposit collected by the appellant is liable to be included as a 'trading receipt' constituting income and not allowable as a deduction in computing the income? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the disallowance of a sum of Rs.24,500/- being the filing fees paid for increasing the capital structure of the company? 3. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in confirming the estimated disallowance of Rs.1,50,420/- treating the same as 'entertainment expenditure' hit by Explanation 2 to Section 37(2A)? 2. The question raised on refundable contingency deposit to be included as trading receipt was already considered in T.C.No.890 of 2005, relating to the assessment year 1991-92. In the circumstances, the said decision would cover the first question raised herein. 3. As regards the second question relating to disallowance of a sum of Rs.24,500/-being the filing fees paid for increasing the capital structure of the company, learned counsel appearing for the assessee submitted that the said issue is covered by the decision reported in [1997] 225 ITR 298 (Shibu Soren and others Vs Commissioner Of Income-Tax). 4. This leaves us with the last question of disallowance of Rs.1,50,420/- as 'entertainment expenditure' as hit by Explanation 2 to Section 37(2A). A perusal of the orders of the authorities below shows that in respect of the expenses incurred to the tune of Rs.3,71,910/- towards boarding, lodging and travelling expenses, the Assessing Officer allowed Rs.1,00,372/- as expenses relating to the assessee's employees and held that a sum of Rs.2,60,655/- represented the expenditure incurred for the inspecting officials from Railways. The assessee claimed it as business expenditure eligible for deduction. The assessee also incurred another sum of Rs.1,00,372/- as cost of tiffin and meals and incurred for the visiting officials from Railway and their staff. The Assessing Officer allowed 50% of Rs.1,00,372/-as relatable to the assessee's employees and rejected the balance. The assessee claimed it as business expenditure eligible for deduction. The assessee also incurred another sum of Rs.1,00,372/- as cost of tiffin and meals and incurred for the visiting officials from Railway and their staff. The Assessing Officer allowed 50% of Rs.1,00,372/-as relatable to the assessee's employees and rejected the balance. Since the expenses incurred at Rs.3,10,841/-related to the entertainment expenses, the same was covered by Section 37(2A). Hence, addition of Rs.1,50,420/- was made in this behalf. The Commissioner of Income Tax (Appeals) affirmed the view of the Assessing Officer. So too the Income Tax Appellate Tribunal. 5. It is seen from the reading of Section 37 that the ceiling which was there for grant of deduction on the entertainment expenditure under Sub Section (2) and (2A) was however removed by the substitution of sub section (2) under Finance Act of 1992 with effect from 1.4.1993.Sub Section (2) itself was omitted subsequently by the Finance Act, 1997 with effect from 1.4.1998. Sub Section (2) as it stood during the relevant assessment year herein in this case, reads as under: "(2) Notwithstanding anything contained in sub-section (1), any expenditure in the nature of entertainment expenditure incurred by any assessee during any previous year commencing on or after the 1st day of April 1992, shall be allowed as follows:- (a) where the amount of such expenditure does not exceed ten thousand rupees, the whole of such amount; (b) in any other case, ten thousand rupees as increased by a sum equal to fifty per cent of such expenditure in excess of ten thousand rupees. Explanation.-- For the purposes of this sub-section, "entertainment expenditure" includes- (i) the amount of any allowance in the nature of entertainment allowance paid by the assessee to any employee or other person; (ii) the amount of any expenditure in the nature of entertainment expenditure not being expenditure incurred out of an allowance of the nature referred to in clause (i) incurred for the purposes of the business or profession of the assessee by any employee or other person; (iii) expenditure on provision of hospitality of every kind by the asessee to any person, whether by way of provision of food or beverages or in any other manner whatsoever and whether or not such provision is made by reason of any express or implied contract or custom or usage of trade, but does not include expenditure on food or beverages provided by the assessee to his employees in office, factory or other place of their work. " The above-said provision was however omitted by the Finance Act 1997 with effect from 1.4.1998. In matters of granting relief on expenditure of this nature, the test is not whether the entertainment expenditure is necessary, but whether the expenditure concerned is a commercial expenditure incurred for the purpose of the business. With the provision of law thus standing, relevant to the assessment year 1994-95, we hold that the assessee is entitled to claim deduction on the said amount of Rs.1,50,520/-disallowed as entertainment expenditure under Section 37(2A), as allowable as per Section 37 read with Explanation (iii). In the result, the Tax Case Appeal filed by the assessee stands partly allowed in respect of Question No.3 alone. No costs.