Qualification of fire extinguishers as aircraft parts - original duty finding under Notification No.50/2017-Sr.545 vacated; remanded for fresh adjudic...
A provision for warranty computed by reference to past experience and a scientific estimation constitutes a present obligation and therefore an ascertained liability; it does not qualify as an amount set aside for unascertained liabilities and so is not subject to add-back in the computation of book profit under the tax regime's alternate profit measure. Reliance on prior higher court authority supporting allowance where liabilities are reasonably estimable was applied. The addition of the warranty provision to book profit was deleted, and the deletion of the addition under the normal tax provisions was sustained against Revenue's challenge.
A provision for warranty computed by reference to past experience and a scientific estimation constitutes a present obligation and therefore an ascertained liability; it does not qualify as an amount set aside for unascertained liabilities and so is not subject to add-back in the computation of book profit under the tax regime's alternate profit measure. Reliance on prior higher court authority supporting allowance where liabilities are reasonably estimable was applied. The addition of the warranty provision to book profit was deleted, and the deletion of the addition under the normal tax provisions was sustained against Revenue's challenge.
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