2006 (4) TMI 457

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....e manufacture and sale of TV and audio system. As a matter of policy, it offers warranty of one year on all the products which it has manufactured and sold. In order to provide for claims arising out of such warranties, the assessee set apart different amounts for different assessment years which it claimed towards deduction. The Assessing Officer, however, disallowed the said claim for deduction ....

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....n. (P.) Ltd. [2005] 278 ITR 337 1. This Court has relied upon the decision of the Supreme Court in Bharat Earth Movers v. CIT [2000] 245 ITR 428 and IRC v. Mitsubishi Motors New Zealand Ltd. [1996] 222 ITR 697 (PC) held that the liability arising out of a warranty is an allowable deduction even when the amount payable by the assessee is quantified and discharged in future. The following passage fr....