TaxTMI 
TaxTMI 
2020 (8) TMI 768
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.... of this Court vide order dated 12.01.2013 on the following substantial question of law: (i) Whether the Tribunal was correct in holding that the provision for warranty of Rs. 3,98,18,294/- is allowable as deduction when the assessee has not made provision on a scientific basis as enunciated by the Apex Court in Rotork Controls India Pvt. Ltd., vs. CIT, 314 ITR 62? (ii) Whether the Tribunal was correct in holding that the assessee is entitled for deduction when excess provision towards warranty made in the previous years is not offered to tax by reversing the entries as laid down by the Apex Court in Rotork Controls India Pvt. Ltd. Vs. CIT, 314 ITR 62? 2. Facts leading to filing of this appeal briefly stated are that as....
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....29 prescribed by Institute of Chartered Accountants. It was further held that In the instant case, the assessee had made provision on the basis of sale and also the actual trend of the last few years and the provision was worked out scientifically every year. It was further held that Commissioner of Income Tax (Appeals) grossly erred in not allowing provision for warranty for the concerned Assessment year on the ground that the ratio between the actual and provision is less than 70 : 100. The Tribunal held that the warranty provision made by the assessee for the concerned Assessment year is justified and no addition is called for. In the result, the appeal preferred by the assessee was allowed. Being aggrieved, the revenue is in appeal befo....
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....submissions made by learned counsel on both the sides and have perused the record. The only issue, which arises for consideration in this appeal is whether the principles laid down by the Supreme Court in Rotork Controls India (P) Ltd. Supra have been taken note of while deciding the issue of estimation of provision for the Assessment year 2008-09. At this stage, it is relevant to extract para 8 of the order passed by the Commissioner of Income Tax (Appeals), which reads as under: I have considered the rival submission. I find the A.O. is not justified in holding that in all cases the provision is to be disallowed as expenditure. This has become the strict law of the past after the pronouncement of the Supreme Court in several case....
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....es laid down by the Supreme Court in Rotork Controls India (P) Ltd. Supra had been taken into account by the Commissioner of Income Tax (Appeals) and the estimation of provision for the Assessment year 2008-09 has been found to be unscientific and unreasonable. The Tribunal has noted that admittedly, the Commissioner of Income Tax (Appeals) has considered the same working method of provision in previous two years and allowed the provision. It was further held that the Commissioner of Income Tax (Appeals) did not allow the provision for warranty for the Assessment year on the ground that the ration between the actual and the provision is less than 70:100. It was further held that the ratio adopted by the Commissioner of Income Tax (Appeals) ....