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9. On the above grounds and on such other grounds that may be advanced at the time of appeal, the appellant prays that the additions made by DC be deleted.

3. The facts of the issue are that the Assessee is a private limited company, engaged in the business of Manufacturing Pharmaceutical Formulations and filed its Return of Income for the Assessment year 2012-13 returning an Income of `14,69,29,707/-. Some products of the appellants are covered by Drug Pricing Control Order (DPCO) of the Government and Government fixed basic prices for certain products. National Pharmaceutical Pricing Authority (NPPA) oversees pricing practices and in case of excess price, it directs the concerned company to deposit the excess charged with the authority. During the previous year ended 31st March 2012, NPPA had charged a sum of ` 4,28,59,543/- as pricing difference and a sum of ` 1,17,17,667/- as interest under Section 7A of Essential Commodities Act, 1955. The Appellant claimed it as expenses in their accounts. 3.1 The AO by his order dated 25.03.2015 ascertained that the amount consisted of two parts viz. (i) amount of ` 4,28,59,543/- for overcharging the prices notified by the Government under Para 13 of DPCO and (ii) interest of ` 1,17,17,667/- for overcharged amount @ 15% per annum u/s.7A of the Essential Commodities Act, 1955 and had held that both these amounts totaling to ` 5,45,77,209/- were in nature of penalty for violation of the provisions of Central Act, and hence were not allowable as per the provisions of Explanation to Sec.37(1) of the Act. Aggrieved, the assessee preferred an appeal before the CIT(A).

Against the order of Ld.CIT(A), now the Assessee is in appeal before us.

4. I proceed to decide the issue after hearing the ld.D.R and perusing the material on record. Admittedly, the assessee is engaged in the business of Manufacturing Pharmaceutical Formulations. Some products of the appellants are covered by Drug Pricing Control Order (DPCO) of the Government and Government fixed basic prices for certain products. National Pharmaceutical Pricing Authority (NPPA) oversees pricing practices and in case of excess price, it directs the concerned company to deposit the excess charged with the authority. During the assessment year, NPPA had charged ` 4,28,59,543/- for overcharging the prices and interest of ` 1,17,17,667/- for overcharged amount @ 15% per annum u/s.7A of the Essential Commodities Act, 1955. The assessee claimed it as an expenditure in its accounts, but the lower authorities found these business expenses by invoking the provisions of Explanation to Sec.37(1) of the Act.