| The Tax Publishers2021 TaxPub(DT) 0970 (Karn-HC) : (2021) 433 ITR 0117 : (2021) 280 TAXMAN 0072 INCOME TAX ACT, 1961
Section 37(1)
Where Tribunal had recorded a finding that provision for warranty made by assessee was on scientific basis and method and had allowed the claim for deduction on account of warranty and neither any averment was made in the memo of appeal with regard to perversity of the finding recorded by the Tribunal nor the same could be demonstrated at the time of hearing of the appeal, therefore, appeal of Revenue was dismissed.
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Business expenditure - Provision of warranty expenses - ITAT recorded a finding that provision for warranty made by assessee was on scientific basis -
Assessee was engaged in the business of manufacture, import, marketing, distribution and export of information technology systems. Case of the assessee was selected for scrutiny and therefore, notice under section 143(2) was issued. Assessee produced the details as were sought from him. AO by an Order disallowed the provision of warranty made by the assessee on the ground that the estimate with regard to provision for warranty has not made on reliable basis but only on ad hoc basis and therefore, it was a contingent and unascertained liability. Held: Tribunal while dealing with the claim of the assessee for deduction on account of provision for warranty had placed reliance on the order passed in assessee's own case for assessment year 2011-12 and has held that the assessee had taken over the business from IBM which had substantial experience in such business and if the assessee has relied on the methodology adopted by the IBM for working out the warranty provision, the same cannot be said to be incorrect. Tribunal had recorded a finding that provision for warranty made by assessee was on scientific basis and method and had allowed the claim for deduction on account of warranty. Neither any averment was made in the memo of appeal with regard to perversity of the finding recorded by the Tribunal nor the same could be demonstrated at the time of hearing of the appeal. Therefore, appeal of revenue was dismissed.
Relied:Rotork Controls India (P). Ltd. v. CIT (2009) 314 ITR 62 (SC) : 2009 TaxPub(DT) 1730 (SC), Renowned Auto Products Mfrs. Ltd. v. ITO (2013) 40 taxmann.com 13 (Mad-HC) : 2013 TaxPub(DT) 1607 (Mad-HC), Sharp Business System v. CIT III (2012) 27 Taxmann.Com 50 (Del-HC) : 2013 TaxPub(DT) 178 (Del-HC), CIT v. Micro Land Ltd. (2012) 18 taxmann.com 80 (Karn) : 2012 TaxPub(DT) 1570 (Karn-HC), CIT v. Apple Computer International Private Ltd. [ITA No. 204/2008 dt. 9-1-2009], Lenovo (India) P. Ltd. v. Dy. CIT IT(TP)A No.582/BANG/2015 dt. 30-5-2016, Lenovo (Ind.) Pvt. Ltd. v. Asstt. CIT [ITA No.607(Bang) 2013, ITA No.542(Bang) 2013, dt. 14-8-2014]Lenovo (India) (P.) Ltd. v. Asstt. CIT ITA No.1457/BANG/2010 dt. 16-3-2012 : 2012 TaxPub(DT) 2551 (Bang-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2007-08
INCOME TAX ACT, 1961
Section 37(1)
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