Dismissing the appeal of the Revenue the Court held  that even if the allegation of the Assessing Officer were accepted that the assessee was doing some illegal mining and the production of the assessee to the extent of 40 per cent. of production was out of illegal mining, the expenses incurred for such production did not attract the disallowance under Explanation 1 to section 37(1) of the Act because the expenses incurred for mining could not be considered as for an offence or prohibited by law in itself. It was not the case of the Assessing Officer that any deduction had been claimed by the assessee for facilitating the carrying out of illegal mining or for any penalty in respect of such illegal mining. The assessee had produced evidence to show that the expenditure claimed had been for purposes of transportation. The oral statements of the transporters recorded behind the assessee’s back could not be used in evidence in the present proceedings. That was opposed to principles of natural justice contrary to law and therefore vitiated.  Court also held that   if a director of the company had been benefited by the expenses in respect of repairs and maintenance and depreciation on helicopter, the Assessing Officer of the director was at liberty to make additions as per law in the hands of such director. No disallowance could be made in the hands of the assessee-company.  (AY. 2010-11)