TaxTMI 
TaxTMI 
2023 (6) TMI 213
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....s justified in confirming the disallowance of provision for warranty created in excess of 2.14% of the sales. 3. The brief facts of the case are as follows: Assessee is a private limited company engaged in the business of distribution of Apple products in India. For the Assessment Year 2016-17, the return of income was filed on 30.11.2016 declaring a total income of Rs. 458,93,41,170/-. Assessment was completed under section 143(3) vide order dated 22.12.2018. The AO, in the said order, made a disallowance of provision for warranty created in excess of 2.14% of sales. The AO relied on the order of the Tribunal in assessee's own case for Assessment Years 2013-14 and 2014-15 in restricting the provision for warranty to 2.14% of the sale....
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....e said appeal, Revenue had challenged the Tribunal's order 6 which had held that the warranty estimated at 2.14% was arrived based on assessee's past experience in the Indian International market and the post sales support rendered based on the technical evaluation. 10. In Rotork Case, it is held that a provision is a liability, which can be measured only by using a substantial degree of estimation and it is recognized when: a) an enterprise has a present obligation as a result of past event; b) it is probable and an outflow of resources will be required to settle the obligation., and c) A reliable estimate can be made of the amount of obligation. 11. It was argued by Shri, Percy Pardiwal....
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....18,651 83,50,20,955 30,09,01,06,354 4.9 4.34 2014-15 83,50,20,955 4,39,48,76,976 2,41,07,43,05 2,81,91,54,826 44,41,82,65,721 9.89 8.01 2015-16 2,81,91,54,826 2,83,23;17,596 2,15,62,64,681 3,49,52,62,741 63,65,833,26,177 4.45 4.85 2016-17 3,49,52,62,741 3,13,33,88,99S 3,63,16,42,487 4,99,72,09,249 98,49,30,90,748 5.21 5.7 2017-18 4,99,72,09;249 3,80,34,30,000 4,37,57,10,300 4,42,54,79,249 1,14,03,23,80,000 3.34 4.44 Total 1874,32,16,533/- 1434,15,87,857 38886,41,85,286 Total provision for AYs 2007-08 to 2016-17 = Rs. 1493,97,36,553/- Total utilization for AYs ....
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....eals are based on DRP'S directions for A.Y. 2011-12 has been already set aside. 15. We have also carefully perused the tabular column furnished by Shri. Pardiwala extracted above showing the provisions made between A.Y. 2007-08 and 2017-18. He is right in his submission that the total utilization for the corresponding A.Y.:4 2008-09 to 2017-18 is 95.5% of the total provision. Therefore, as held in Rotork Case, the estimate made by assessee is reliable and robust. 16. In view of the above, the orders passed by the AO and confirmed by CIT(A) and the Tribunal are unsustainable in law and these appeals by the assessee merit consideration. 17. So far as the connected appeal 9 by Revenue is concerned, we may record ....