Allowing the petition the Court held that   even if the assessee had incurred any expenditure towards advertisement, sales promotion, product display posters, etc. on the direction of the DIPL and these expenditures might have benefited Diageo as well, did not entail right to deny deduction under section 37(1) of the Act. It was unacceptable to even suggest that the expenses were not incurred for the purpose of business of the assessee. This was because in the affidavit-in-reply itself it was admitted that the assessee was engaged in the business of importing and trading in foreign made foreign liquors. Even the reasons recorded states that the assessee was engaged in import of alcoholic beverages from Diageo Brands BV and the assessee was in the business of importing and trading in foreign made foreign liquors. The reasons which had been recorded, could never have led a prudent person to form an opinion that income had escaped assessment within the meaning of section 147. The notice of reassessment was not valid. (AY.2007-08)