Dismissing the appeal of the Revenue the Court held that once the Assessing Officer has raised the queries which the assessee may not have answered fully, cannot be considered as no enquiry was conducted. What section 263 covered prior to insertion of Explanation 2 was a case of no enquiry but not of inadequate enquiry. Explanation 2 is prospective in nature. Accordingly the deduction under section 36(1)(vii) of the Act with respect to write off of interest receivable foregone under One Time Settlement (‘OTS’) entered into by the asseessee with its borrowers and deduction under section 36(1)(iii) of the Act with respect to interest expenditure incurred with orrowings made for the slum rehabilitation project at Dindoshi, which was allowed by the Assessing Officer, revision order by the Commissioner which was quashed by the Tribunal was affirmed by the High Court. (AY. 2006-07)