ORAL JUDGMENT S.H. Kapadia, J. Being aggrieved by the decision of the Tribunal dated 26th October, 1999, the department has come in Appeal under section 260-A of the Income Tax Act. The present matter is confined to assessment year 1987-1988 and assessment year 1990-1991. By the impugned decision of the Tribunal, the addition of interest on non-refundable deposits come to be deleted on the ground that such interest did not constitute a Trading Receipt. Similarly, the Tribunal disallowed addition made on account of excess price of sugar cane being charged by the Karkhana. The department took the view that the Karkhana had charged price of sugar cane in excess of the price statutorily fixed by the Government. Accordingly, the department took the view that the excess price constituted Trading Receipt/Income in the hands of the assessee. Accordingly, the department has made additions to the income of the assessee which has been disallowed by the Tribunal. Therefore, the present Appeal has been filed by the department. Similarly, the department made additions on account of expenses incurred by the Karkhana on account of Shubhechha Greetings on the ground that they constituted advertisement expenses and, therefore, such expenses were disallowed under the Income Tax Act. This add-back by the department came to be deleted by the Tribunal. Therefore, the department has come in Appeal. FINDINGS: (1) Whether interest on non-refundable deposits constitute trading receipt in this case 2.In the case of Commissioner of Income Tax v. Chhatrapati Sahakari Sakhar Karkhana Limited 245 I.T.R. 498, this Court, after examining the by-laws of the Karkhana came to the conclusion that the Karkhana has made deductions from the cane price payable to sugar cane growers. That these deductions were on following counts viz. for area development fund, cane development fund, hutments fund, members non-refundable deposits and members refundable deposits as also on account of voluntary deposits of members funds. After examining the by-laws of the Karkhana, this Court came to the conclusion that these non-refundable deposits were not voluntarily made by the cane growers. That such deposits constituted important source of revenue for the Karkhana. That these deposits constituted income for the Karkhana. In the circumstances, the interest on non-refundable deposits could not have been claimed as deductions by the Karkhana. They constituted accretion to the income. Therefore they are Trading Receipts. Therefore, the Tribunal erred in coming to the conclusion that non-refundable deposits and interest on non-refundable deposits are not Trading Receipts. In other words. in view of our the judgment in 245 I.T.R. 498, Non-refundable deposits and interest thereon constituted Trading Receipts in the hand of the assessee Karkhana. Accordingly, the decision of the Tribunal is set aside on this question. Accordingly, question No.1 is answered in favour of the department and against the assessee. The judgment of the Full Bench of the Bombay High Court in the case of Commissioner of Income Tax v. Shree Nirmal Commercial Limited 213 I.T.R. 361 has no application to the facts of the present case. In that matter, the deposit collected from the share holders in exchange for occupancy rights was treated by the Court as a non-refundable deposits. Therefore, the Court came to the conclusion that interest on such deposits was deductable. In our case as stated hereinabove the Court has held in 245 I.T.R. 498 that non-refundable deposit constituted source of revenue and income in the hands of the Karkhana. In the case reported in 213 I.T.R. 361, the terms and conditions of deposit indicate that they were of a voluntary nature. In the case of Sugar Karkhana, the cane grower has no option. He has to deposit certain amount as non-refundable deposit. Therefore, the judgment of the Bombay High Court in 213 I.T.R. 361 has no application to the facts of the present case. (2) Whether the Karkhana charged the sugar cane price in excess of the price fixed by the Government and if so, whether the excess price constituted Income/Trading Receipt in the hands of the Karkhana 3.In the present matter, the department took the view that the price charged by the Karkhana was without obtaining the approval of the Director of Sugar, Government of Maharashtra and, therefore. the price charged was clearly in breach of By-law No. 64 of the assessee-Society. Accordingly, the department disallowed the excess cane price which resulted in addition of Rs. 2.35 lacs to the income of the Karkhana. In other words, expenditure incurred by the Karkhana by way of payment of cane price to the sugar cane growers came to be disallowed. Such additions were made for both the aforestated two assessment years. In our view, the Tribunal was right in ordering deletion of such additions. While fixing the cane price, the Karkhana took into account the price paid by neighbouring sugar factories. If the Karkhana had paid a lesser price, the Karkhana could not have been able to procure sugar cane for running of the factory because the sugar cane growers would not have supplied sugar cane to the assessee-Karkhana if it offered a price below the price offered by neighbouring Karkhanas. Therefore, the price fixed by the Karkhana was based on commercial expediency and merely because the price paid was in contravention of bylaws, it cannot be said that the payment was unreasonable. The reasonableness of the expenditure has to be judged from the point of view of businessmen. The payment was not a sham. The payment was purely for business purposes. Under the Income Tax Act one has to see whether the expenditure was incurred only and exclusively for the purposes of business. If the expenditure has been incurred out of commercial expediency then it cannot be disallowed merely because the payment was in breach of some bye-laws. The breach of the by-law, if any, in the present case cannot be a ground for disallowing a bonafide expenditure. Accordingly, we hereby uphold the decision of the Tribunal. Accordingly, Question No. 2 is answered in favour of the assessee and against the department. In the case of K.C.P. Limited v. Commissioner of Income Tax 245 I.T.R. 421, the assessee carried on the business of manufacturing and selling sugar. The assessee sold sugar at a price higher than the levied price fixed by the Government. The question which arose for determination before the Supreme Court was whether the excess price charged by the assessee constituted a Trading Receipt in the assessees hands. It was held that the excess amount realised by the assessee was a Trading Receipt. In that matter, the Supreme Court observed that there was nothing on record to find out how and in what manner, the accounts were maintained by the assessee. The judgment of the Supreme Court in 245 I.T.R. 421 has no application to the facts of the present case. As stated above, in the Judgment of this Court reported in 245 I.T.R. 498 this Court, on examination of the by-laws, came to the conclusion that fixation and payment of price of sugar cane form part of trading operations of the assessee. That was not so in the case before the Supreme Court. Secondly, in the present case, the Karkhana was required to purchase sugar cane from the growers by paying a price. Such payment constituted expenditure. The Karkhana claimed deduction for such expenditure. This expenditure was disallowed on the ground that it was an excess price charged in violation of the by-laws. We have held that for income tax purpose, one has to go by the test of commercial expediency. On the other hand, in the case before the Supreme Court, the assessee was in the business of manufacturing and selling sugar. It was a case of sale of sugar at a price higher than the levy price fixed by the Government. It was a case of income according to the assessed whereas in the present case, we are concerned with disallowance of expenditure claimed by the assessee. Therefore, the judgment of the Supreme Court has no application to the facts of the present case. (3) Whether expenses on account of Shubhechha Greetings constituted revenue expenditure 4.According to the Assessing Officer, a sum of Rs.1.60 lacs was spent for greetings which could not be allowed as advertisement expenses. However, the C.I.T. (Appeals) as also the Tribunal went through the advertisement in a Marathi newspaper issued on the occasion of Diwali and on examination of the said advertisement, came to the conclusion that it was an expenditure necessary to maintain co-ordial relationship between the Karkhana and its members and accordingly, they came to the conclusion that the aforestated amount constituted revenue expenditure. This a pure finding of fact. We do not wish to interfere with the said finding. In any event, no substantial question of law arises. We hereby confirm the decision of the Tribunal on this point. Accordingly, this question is also answered in favour of the assessee and against the department. 5.Under the above circumstances, the following Order is passed: ORDER Question No. 1 is answered in favour of the department and against the assessee. Question Nos. 2 and 3 are answered in favour of the assessee and against the department. Accordingly, the Appeal is partly allowed. No order as to costs.