TaxTMI 
TaxTMI 
2019 (10) TMI 841
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....peals. The Ld. Sr. Counsel for the assessee further submitted that with respect to the assessee's appeals, they are on the issue of "Provision for warranty", whereas, all the Revenue's appeal pertains to the issue of "Administrative service charges". That apart, the assessee has also preferred additional grounds which relates to the issue of "Education Cess". First, we would adjudicate the additional ground preferred by the assessee regarding the claim of allowability of "Education Cess". ITA Nos.2486 to 2488/PUN/2017 (By Assessee) A.Ys.2012-13 to 2014-15 A. Adjudication of Additional ground- Education Cess: 4. The Ld. Sr. Counsel for the assessee submitted that this issue is covered by the decision of the Pune Bench of the Tribunal in ITA No.1111 & 1112/PUN/2017 and CO No.23 & 24/PUN/2019 for the assessment year 2013-14 & 2014-15. The Co-ordinate Bench of the Tribunal, Pune on this issue has held and observed as follows: "12. Referring to Ground No.4, the Ld. Counsel submitted that this ground relates to the allowability of deduction in respect of the educational cess paid by the assessee. The Ld. Counsel further submitted that this issue is covered in n....
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....erred in holding that the education cess is a disallowable expenditure u/s.40(a)(ii) of the Act." The Hon'ble High Court had observed therein that "in the CBDT circular where word "Cess" is deleted and therefore, the Tribunal has committed an error in not accepting the contention of the assessee. Apart from the Supreme Court decision referred that assessment year is independent and word Cess has been rightly interpreted by the Supreme Court that the Cess is not tax". In that view of the matter, the Hon'ble High Court had held that the view taken by the Tribunal on Question No.3 should be reversed and ordered accordingly the said issue was answered in favour of the assessee. 7. Respectfully following the view taken by the Co-ordinate Pune Bench of the Tribunal in the aforesaid case and in view of the ruling by the Hon'ble Rajasthan High Court, we allow these additional grounds raised before us in respect of the allowability of deduction regarding "Education Cess" paid by the assessee. Thus, additional grounds raised by the assessee are allowed. B. Adjudication of the ground in appeal Memo- disallowance of provision for warranty : 8. The Ld. Sr. Counsel for the assessee r....
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....erage of last 4 quarters actual claims multiplied by 5 quarters in case of "Paralift" and 7 quarters in case of 6-Rod products. 5 quarters and 7 quarters represent the half of warranty period plus one quarter (assuming that vehicle to be sold after one month after build up). The same is based on above warranty policy. The amount so arrived would be carried forward and fresh claims would be adjusted against the opening provision. The provision amount would be calculated at the end of every quarter. In this regard, the actual provision working for AY 2011-12 is reproduced below for your goodselfs ready reference: Rs. In INR Particulars Amount Reference Actual Warranty Claim received for the year 2010-11 1,73,30,055 Annexure-4 Add:Warranty Claims likely to be accepted in Future 2,45,16,733 Annexure-5 (Subtotal) 4,18,46,788 Refer page no.30 to 61 Warranty Provision as per P&L 3,96,03,899 9. From the above, it is evident that the warranty is claimable by the consumers for which the conditions are specified. Therefore, in our view, the assessee has policy for payments towards the warranty expenses. Therefore, in principle, we do not a....
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....ained this method in principle over the years and they are not disturbed conclusively. Therefore, we hold that the provisions created by the assessee are required to be allowed as claimed by the assessee. Accordingly, the grounds raised by the assessee in this appeal are allowed." 9. The Ld. DR fairly conceded that the issue is covered in favour of the assessee. 10. We have perused the case records and heard the rival contentions. We have also considered the judicial pronouncements placed before us on record. Both the parties agreed that the facts and circumstances are absolutely similar with regard to the case filed before us. That as a matter of fact, the Ld. Sr. Counsel for the assessee even demonstrated from the order of the Assessing Officer at Page No.81 of the paper book, Para-6.1 of the assessment order. We observe that in the assessee's own case for assessment year 2011-12 (supra.), the Tribunal has given catetorical findings stating that the policy adopted by the company was not found erroneous by the authorities in any forum and therefore, it is wrong to infer that the assessee does not have a policy and the contractual obligation to make the payment in principle a....
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....he CIT(A) has allowed expenditure @ 25% of total expenses and no basis has been given by the CIT(A) to allow the said expenditure @ 25% of the total. There is no basis for measuring such services and in the absence of any evidence brought on record to establish that the expenditure incurred by the assessee was excessive i.e. more than market value of the said services, we find no merit in the orders of authorities below in invoking provisions of section 40A(2)(a) of the Act. Accordingly, we modify the order of CIT(A) and direct the Assessing Officer to allow the expenditure in totality in the hands of the assessee as the said expenditure has been laid down in terms of the agreement agreed upon between the parties and is for carrying on of the business of the assessee more efficiently and is allowable as business expenditure. The grounds of appeal No.2 and 3 raised by the assessee are allowed and ground of appeal No.2 raised by the Revenue is dismissed." 13.1 The Ld. Sr. Counsel for the assessee further submitted that in this case referred before us (supra.), the Ld. CIT(Appeals) has given partial relief to the assessee whereas, the Tribunal reversing the said order of the Ld. CI....