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| The Tax Publishers2021 TaxPub(DT) 2276 (Mad-HC) INCOME TAX ACT, 1961
Section 37(1)
Where assessee's provision was scientific and assessee was consistently following the said method for several assessment years, therefore, deduction for provision for warranty was allowed to assessee.
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Business expenditure - Provisions for warranty - Assessee was following scientific method -
Issue under consideration was as to whether Tribunal was right in allowing provisions for warranty, without appreciating the fact that the claim made by the assessee was only after comparing the previous year records which was not done on a scientific basis. Held: Tribunal had taken note of the decision of High Court in ITA No.400 of 2021 : 2020 TaxPub(DT) 3465 (Karn-HC) CIT v. Amco Batteries Ltd., wherein the ratio adopted by assessee was tested for its correctness and whether it was on scientific basis and it was held that assessee's provision was scientific. These transactions were identical and assessee was consistently following the said method for several assessment years. Therefore, CIT(A) rightly held that the assessee had followed the scientific method and deduction was allowed to assessee.
Followed:Rotork Controls India (P) Ltd. v. CIT (2009) 314 ITR 62 (SC) : 2009 TaxPub(DT) 1730 (SC), CIT v. Amco Batteries Ltd. 2020 TaxPub(DT) 3465 (Karn-HC), Renowned Auto Products Mfrs. Ltd. v. ITO (2013) 40 Taxmann.com 13 : 2013 TaxPub(DT) 1607 (Mad-HC), CIT v. Forbes Campbell Finance Ltd. 2013 TaxPub(DT) 1280 (Mad-HC) and Dy. CIT v. Amco Batteries Ltd. [ITA No.3155/Chny/2019, dt. 22-12-2020].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
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