1. This Appeal challenges the order passed by the Income Tax Appellate Tribunal, copy of which is "Annexure-O" to the Memo of Appeal dated 18th May, 2012.

2. The assessment year in question is 2003-04.

3. The Assessee Appellant challenged the order passed by the Commissioner of Income Tax (Appeals), namely, the First Appellate Authority dated 31st May, 2010 before the Tribunal and raised the issue of disallowance of capital expenditure of Research and Development of Rs.48,76,810/- and essentially the imposition of penalty under section 271(1)(c) after such disallowance.

4. Mr. Sanjiv Shah, learned counsel, appearing on behalf of the Assessee in support of this Appeal submits that it raises substantial questions of law. He submits that the substantial question of law is; whether the Tribunal was justified in upholding the imposition of penalty pertaining to addition of Research and Development expenditure? In the submission of the counsel, none of the ingredients of section 271(1)(c) read with explanation thereto can be said to be attracted. This was not a case, according to him of the expenditure not being incurred at all. The expenditure has not been held to be false. The