https://www.taxtmi.com/caselaws?id=758037 ITAT Ahmedabad allowed the assessee's appeal regarding disallowance of warranty provision expenses under Section 37. The tribunal noted that AO had allowed similar provisions in subsequent assessment years (AY 2018-19 and AY 2021-22), indicating department's acceptance of the provision's reasonableness. The provision made in AY 2017-18 was later reversed in AY 2021-22 with reversal amount offered as income in AY 2022-23, demonstrating prudent estimation. Relying on SC decisions in Rotork Controls India and Bharat Earth Movers, the tribunal held that provisions for future liabilities based on reasonable estimates and complying with accounting standards are deductible. The disallowance was deleted. en-us Fri, 30 Aug 2024 00:00:00 +0530 Fri, 06 Sep 2024 08:20:59 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=758037 ITAT Ahmedabad allowed the assessee's appeal regarding disallowance of warranty provision expenses under Section 37. The tribunal noted that AO had allowed similar provisions in subsequent assessment years (AY 2018-19 and AY 2021-22), indicating department's acceptance of the provision's reasonableness. The provision made in AY 2017-18 was later reversed in AY 2021-22 with reversal amount offered as income in AY 2022-23, demonstrating prudent estimation. Relying on SC decisions in Rotork Controls India and Bharat Earth Movers, the tribunal held that provisions for future liabilities based on reasonable estimates and complying with accounting standards are deductible. The disallowance was deleted. Case-Laws Income Tax Fri, 30 Aug 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=758037