2015 (7) TMI 657

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....ing Counsel JUDGMENT (Delivered by R. Sudhakar, J.) The assessee has filed this appeal under Section 260A of the Income Tax Act, 1961 challenging the order of the Income Tax Appellate Tribunal, 'A' Bench, Chennai, dated 30.11.2007 made in I.T.A.No.983/ Mds/2006 for the assessment year 2002-2003, and the same was admitted on the following questions of law: (i)Whether the Tribuna....

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....lant provides warranty of its product, which includes preventive maintenance service, breakdown calls and provision for spares, as per the warranty clause. The said warranty clause is based on contractual obligation and is provided in the respective sales contract. 2.2. The assessee debited a sum of Rs. 1,53,01,497/- being the amount of unexpired warranties and claimed deduction. However, the A....

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....rsued the matter before the Tribunal. The Tribunal following the decision of this Court in Commissioner of Income Tax v. Rotork Controls India Ltd. and others, (2007) 293 ITR 311 came to hold that since the warranty provision made as against the liability had not crystallized against the assessee, the plea of the assessee seeking deduction is unsustainable. Accordingly, the Tribunal set aside the ....

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....rical trend indicates that a large number of sophisticated goods were being manufactured in the past and in the past if the facts established show that defects existed in some of the items manufactured and sold then the provision made for warranty in respect of the army of such sophisticated goods would be entitled to deduction from the gross receipts under section 37 of the 1961 Act." In the s....