2013 (4) TMI 176

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....rse of assessment proceeding it was, inter alia, observed by the A.O. that the assessee company has maid a provision for warranty period supplies amounting to Rs. 21,94,000/-. The assessee was asked to furnish the explanation regarding the allowability of the same. In reply, it was submitted by the assessee that the assessee had made provision for warranty period supplies of Rs. 21,94,000/- in the current year. Elaborating, it was submitted that the assessee was obliged to honour warranty claims upto 3 years and that the provision was made on the basis of empirical study and available data using scientific method. However, the A.O. was of the view that the expenditure claimed cannot have a scientific basis of determination because of the si....

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....f the above, he does not want to press the alternative ground No. 2 raised by the assessee. 5. On the other hand, the ld. D.R. supports the order of the A.O. and the ld. CIT(A). 6. We have carefully considered the submissions of the rival parties and perused the material available on record. We find that the facts are not in dispute inasmuch as it is also not in dispute that the assessee has made provision for warranty expenditure in the year of sale on the basis of past experience using scientific method. It was disallowed by the A.O. on the ground that the said provision for warranty of Rs. 21,94,000/- is a contingent liability. On appeal, the ld. CIT(A) following the appellate orders for assessment years 2005-06 & 2006-07 confirmed the....