2018 (9) TMI 877

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.... Tax Appellate Tribunal ('Tribunal' for short). The appeal pertains to Assessment Year 2003-04. 2. First issue relates to provision for warranty of Rs. 5.48 crores. The Assessing Officer vide assessment order dated 27.02.2006 had disallowed claim for provision for warranty as unascertained liability, and that only the actual warranty charges incurred could be allowed as expenditure. The Assessing Officer had also observed in the assessment order that the sales of the respondent-assessee had taken off on a large scale with substantial increase in sales of mobile phones etc. from Rs. 58.9 crores to Rs. 830.5 crores. To support the disallowance made, the Assessing Officer held that the technology in the mobile phone industry was rap....

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....r (a) Opening balance of warranty (b) Closing balance of warranty (c) Amount of Provision disallowed (d) Actual warranty expense (e) Am of expenses debited to P/L a/c  (f) Total Sales for the year (from Mobile phone) (g) Percentage of closing provsn to sales (h)=(c)/ (g) 2001-02 1.65 1.44 0.94 1.78 1.57 66.57 2.16 2002-03 1.44 1.24 0.78 1.60 1.40 58.97 210 2003-04 1.24 6.73 5.48 5.87 11.36 830.51 0.81 2004-05 6.73 25.20 18.47 23.30 41.77 2,408.01 1.05 2005-06 25.20 64.10 32.02 68.70 107.60 4,729.14 1.36   " He submits that the claim for warranty was not based on scient....

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....ustify disallowance of claim/expenditure on account of provision for warranty, though in a given case on basis of data it could be relevant factor in making the calculations. 7. In the aforesaid factual matrix and in view of the decision of the Supreme Court in Rotork Control India Pvt. Ltd. (supra) and decision of this Court in respondent-assessee's case in ITA Nos.841/2009 and 842/2009, we do not find any good ground or reason to accept the aforesaid contention of the Revenue. 8. Second issue raised by the Revenue relates to capitalization of marketing expenses to the extent of Rs. 39.98 lakhs. Assessing Officer had observed that the respondent-assessee had provided mobile handsets to their dealers, employees and after-sale-serv....

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....ployees, dealers, sales personnel and after-sales-service centres. In the absence of any material and evidence to show that the findings of fact are perverse, we do not see any reason to interfere with the impugned order on the said aspect. 11. The third issue raised by Counsel for Revenue relates to addition of more than Rs. 2.68 crores on account of stocks damaged during transportation etc., which had not been included in the closing stock. The Assessing Officer held that value of the mobile phones damaged in transit should be included the closing stock. The Commissioner of Income Tax (Appeals) had affirmed the addition observing that he would follow the orders of the earlier assessment years, though appeals on this issue was pending b....