https://www.taxtmi.com/caselaws?id=775936 The ITAT Mumbai allowed the assessee's appeal, holding that the provision for warranty expenses is an allowable deduction under section 37 of the Act. The tribunal found the provision to be systematically and consistently calculated based on a scientific methodology related to the business turnover, not arbitrary or whimsical. It rejected the lower authorities' view that the provision was contingent and disallowable, noting the provision aligns with the accrual accounting system, matching principle, and applicable Accounting Standards. The warranty provision was considered an ascertained liability expected to be utilized within a year, thus deductible. The decision followed the Supreme Court precedent in Rotork Controla India (P) Ltd, confirming that such provisions, when reasonably estimated and business-related, cannot be disallowed. en-us Wed, 04 Jun 2025 00:00:00 +0530 Sat, 02 Aug 2025 07:24:43 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=775936 The ITAT Mumbai allowed the assessee's appeal, holding that the provision for warranty expenses is an allowable deduction under section 37 of the Act. The tribunal found the provision to be systematically and consistently calculated based on a scientific methodology related to the business turnover, not arbitrary or whimsical. It rejected the lower authorities' view that the provision was contingent and disallowable, noting the provision aligns with the accrual accounting system, matching principle, and applicable Accounting Standards. The warranty provision was considered an ascertained liability expected to be utilized within a year, thus deductible. The decision followed the Supreme Court precedent in Rotork Controla India (P) Ltd, confirming that such provisions, when reasonably estimated and business-related, cannot be disallowed. Case-Laws Income Tax Wed, 04 Jun 2025 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=775936