2010 (1) TMI 33

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.... 'the Tribunal') in ITA No. 1973/Del/2008. 2. The issue raised before the Tribunal was with regard to the disallowance of the provision made for warranty expenses amounting to Rs 31,35,150/- 3. In the course of the assessment proceedings, the Assessing Officer noticed that the assessee had claimed warranty expenses as under:- (i) Warranty on actual expense basis Rs 35,69,999/- (ii) Provision for warranty expenses Rs 31,35,150/- Rs 67,05,149/- 4. The Assessing Officer asked the assessee to explain as to why the provision for warranty expenses amounting to Rs 31,35,150/- should not be disallowed, inasmuch as the claim of provision for warranty expenses was contingent in nature. The Assessing Officer pointed out that in earlier years,....

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....an event in future, such as, a fault occurring in the goods and resultant claims made by the customers. As a result, the Assessing Officer disallowed the assessee's total claim for provision made for warranty amounting to Rs 31,35,150/- by treating the same to be of a contingent nature. 7. The Commissioner of Income Tax (Appeals) confirmed the finding of the Assessing Officer. 8. Being aggrieved, the assessee preferred an appeal before the Tribunal. Since the assessee had been allowed the claim of actual warranty expenses amounting to Rs 35,69,999/-, the dispute before the Tribunal was only with regard to the provision for warranty expenses amounting to Rs 31,35,150/- made during the year by changing the accounting system from actual ....