The Department had earlier disallowed expenditure aggregating to over Rs.50 crore cumulatively incurred by the Company during 5 assessment years commencing with Assessment Year 2006-07. The Company had successfully appealed before the Hon'ble ITAT against the order of the Department for AY 2006-07 (against which the Department had appealed before the Hon'ble Court as explained above). The appeals for remaining assessment years are pending before the Hon'ble ITAT.

The Hon'ble Court found no merit in contentions of the Department challenging the correctness of the ITAT's order in favour of Company for AY 2006-07. Accordingly, the Hon'ble Court dismissed the appeals of the Department on merit as well as on account of delay.