The assessment of the assessee was reopened on  two counts,  firstly, the diversion of profit by transfer of technology by Sun BVI to Caraco, USA; and secondly, allocation of R&D expenses, whereby the products manufactured at Sun Pharma Industries (SPI) & Sun Pharmaceuticals, Silvassa (SPS) are being developed at the R&D facilities of Sun Pharmaceutical Industries Limited (SPIL) and the expenditure related to such R&D is debited in the books of account of Sun Pharmaceuticals Industries Limited-the petitioner, thereby reducing its profit and correspondingly, inflating the profit of both SPS & SPI to that extent.  High Court after taking in to consideration of all the facts held that, notice of re-opening on the first ground reflected in reasons of reopening is sustained whereas the same is not upheld on the second ground. Accordingly relief granted in favour of assessee in respect of the second ground stands confirmed. Assessing Officer is permitted to proceed with the re-assessment proceedings on the first ground raised in reasons recorded without being in any manner influenced by any of the observations made in this petition. (AY. 2005-06)