Assessee's Appeals Partially Allowed, Revenue's Appeal Rejected.

The Tribunal partially allowed the assessee's appeals by limiting the disallowance of disputed purchases to 6% and permitting the deduction under Section 35(2AB). The revenue's appeal was rejected, and the CIT(A)'s decision to delete the disallowance under Section 14A was upheld.

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Issues Involved:
1. Disallowance of 10% of disputed purchases.
2. Rejection of deduction claim under Section 35(2AB) of the IT Act.
3. Restriction of disallowance under Section 14A to the extent of exempt income earned.
4. Confirmation of disallowance of non-genuine purchases in the revised return.

Detailed Analysis:

1. Disallowance of 10% of Disputed Purchases:
The Assessing Officer (AO) disallowed Rs. 4,92,14,139/- as non-genuine purchases based on information from the Sales Tax Department and a subsequent survey. The assessee argued that the purchases were genuine and provided evidence, but the AO was not convinced. The CIT(A) restricted the addition to 10% based on a previous Tribunal order. The Tribunal reviewed the remand report, which did not dispute the records, and concluded that a 6% disallowance would be just, considering the totality of facts and circumstances. Hence, the disallowance was restricted to 6% of the alleged bogus purchases.

2. Rejection of Deduction Claim Under Section 35(2AB):
The AO denied the claim for weighted deduction of Rs. 4,98,89,829/- under Section 35(2AB) on the grounds that the approval for the R&D facilities was granted after the close of the relevant financial year. The CIT(A) upheld this decision, stating that the effective date of approval was crucial and the assessee did not comply with all conditions. The Tribunal, however, noted that the issue was covered by numerous judgments favoring the assessee, including the Bombay High Court in PCIT v. Strides Arcolab Ltd., which held that the date of approval relates back to the date of application. The Tribunal allowed the deduction, reversing the orders of the AO and CIT(A).

3. Restriction of Disallowance Under Section 14A:
The CIT(A) deleted the disallowance of Rs. 39,354/- under Section 14A, observing that the assessee had sufficient own funds to make the investments in equities, as supported by the jurisdictional High Court decisions in Reliance Utilities and Power Ltd. and HDFC Bank Ltd. The Tribunal found no infirmity in the CIT(A)'s order and affirmed it, rejecting the revenue's ground of appeal.

4. Confirmation of Disallowance of Non-Genuine Purchases in the Revised Return:
For A.Y. 2009-10, the AO disallowed Rs. 15,55,062/- based on information from the DGIT (Investigation) and a survey. The assessee initially offered this amount as additional income but later retracted. The CIT(A) upheld the disallowance, noting that the assessee voluntarily offered the amount during the survey. The Tribunal, however, found that the assessee provided substantial evidence of the purchases' genuineness during remand proceedings, which the AO did not dispute. The Tribunal directed the AO to restrict the disallowance to 6% of the alleged non-genuine purchases, similar to the decision for A.Y. 2011-12.

Conclusion:
The Tribunal partly allowed the assessee's appeals, restricting the disallowance of disputed purchases to 6% and allowing the deduction under Section 35(2AB). The revenue's appeal was dismissed, and the CIT(A)'s deletion of the disallowance under Section 14A was affirmed.

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