Consequent to search operations, the assessee approached settlement commission. Based on evidence such as registers which showed the existence of unaccounted production, actual employees exceeding the employees in the books and the statements of such employees that there is unaccounted production, an addition was made by extrapolating the actual production vis a vis the reported production of the current year to the preceding years. The assessee challenged the settlement order by way of a writ. Dismissing the assessee’s ground, the High court held that there was sufficient evidence with the settlement commission to come to the conclusion that there was unaccounted production and considering the limited scope of review of the order of the settlement commission by way of a writ, no interference was called for. The second issue arising out of the settlement commission’s order was that it held that the assessee’s manufacturing process could be divided into three stages and the first stage did not result in any new product. It was therefore held that the expenditure pertaining to stage 1 could not be allowed under section 80IB. The High Court overturned such findings of the Settlement Commission and held that the entire manufacturing process was one activity and it was wrong for the Settlement Commission to dissect such activity into stages and disallow expenses pertaining to stage 1. The third issue challenged before the High Court was the Commission’s disallowance of expenditure on director’s higher education abroad. The High Court held that the issue was very factual and there being no perversity, there was no cause for interference. (AY. 2003-04 to 2009-10)