Assessee's Defect Liability Expense Not a Warranty; Revision Under Section 263 Quashed by ITAT

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....The ITAT allowed the assessee's appeal against the PCIT's revision under Section 263, holding that the defect liability provision debited by the assessee is not analogous to a warranty. The PCIT erred in disregarding the tender terms from the Vadodara Municipal Corporation, which explicitly mandated a ten-year defect liability with a 5% performance guarantee. The tribunal found the Assessing Officer's acceptance of the defect liability as a site miscellaneous expense in the Profit & Loss account to be a plausible view, rendering the revision order setting aside the assessment unjustified. Consequently, the PCIT's order was quashed, and the assessment order was upheld in favor of the assessee.....