The Settlement Commission passed an order dated July 31, 2013 under section 245D(4) of the Act whereby the Settlement Commission allowed the assessee’s settlement application and also granted immunity from penalty and prosecution. Admittedly, in the statement of the assessee’s director recorded under section 132(4) of the Act, the assessee offered additional income of Rs. 12,16,83,252 which included Rs.11,95,51,448 on account of alleged bogus purchases. The Settlement Commission allowed capitalization to the extent of Rs. 8,33,53,000 and consequently held depreciation may be allowed. On a writ petition against the order the Revenue contended that on the claim of deduction made by the assessee under section 80-IB(10) of the Act a sum of Rs. 2,07,51,048 should be treated as income from other sources. It also submitted that the capitalisation was erroneous. Dismissing the writ petition, the Court held that   it was the Revenue’s case that the claim to deduction under section 80-IB(10) of the Act was not examined in accordance with section 245D(3). Calling for a report is solely at the discretion of the Settlement Commission and the court should not interfere with an exercise of discretion by the Settlement Commission. Moreover an ad hoc disallowance of expenses had been made by the Revenue for the assessment years 2005-06, 2006-07, 2007-08, 2008-09 in the assessment order passed under section 143(3) read with section 153A of the Act for those years. Detailed working and explanation in respect thereof was already available as a part of the settlement application and submissions. The issue raised being a question of fact as to the quantum of deduction to be allowed under section 80-IB(10) of the Act could never qualify as ground for interference by this court under article 226 of the Constitution of India. That the assessee was subjected to search and seizure action under section 132 of the Act on March 29, 2011. In the course of search, the investigation team of the Revenue came across a diary which was seized and showed that the assessee had entered into certain transactions of purchases which were alleged to be bogus. The director of the assessee in his statement recorded under section 132(4) of the Act accepted the total of such bogus purchases at Rs. 11,95,41,448. The seized diary showed that part of the cash generated by the company from bogus purchases was utilized for the purposes of incurring capital expenditure at its office premises. Under the provisions of section 292C(1) the Settlement Commission could presume the document to be true. Since the bogus purchases were offered to tax by deduction from the work-in-progress, the corresponding utilization of the cash towards incurring of capital expenditure was treated as an addition to fixed assets eligible for depreciation. The High Court could not interfere with the order of the Settlement Commission on this ground. Referred,  Jyotendrasinhji v. S. I. Tripathi (1993) 201 ITR 611 (SC),  Kotak Mahindra Bank Ltd. v. CIT (2023)) 458 ITR 113 (SC)    (AY.2005-06 to 2011-12)