TaxTMI 
TaxTMI 
2019 (6) TMI 1751
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....-I, Gurgaon ('CIT(A)') has erred in dismissing the appeal filed by the assessee on certain additions made by learned assessing officer ('AO') in the assessment order passed under section 143(3) of the Act by passing his order under section 250(6) of the Income-tax Act, 1961 ('the Act'). Each of the ground is without prejudice and in addition to one another. That on the facts and circumstances of the case and in law: 1. Based on the facts and in the circumstances of the case and in law, the order passed by the learned CIT(A) confirming additions made by learned AO is erroneous and bad in law. 2. Based on the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the disallow....
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....s support services to its group Companies. Return income of Rs. 51,97,45,863/- was assessed at Rs. 55,08,11,946/-, consequent upon an addition of Rs. 2,78,59,244/- on account of provision for warranty. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR during the hearing submitted that the issue is squarely covered by the Tribunal's order in assessee's own case for Assessment Year 2008-09, being ITA No. 1494/del/2014 order dated 7/5/2018 whereby the ratio of the Hon'ble Supreme Court decision in case of Rotork Control India Pvt. Ltd. Vs. CIT(A) 314 ITR 62 was followed. The Tribunal set aside the issue to the file of the Assessing O....
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....g warranty provision expenditure required to be made over a period of the warranty claim is definitely to be charged to the profit and loss account to arrive at the correct figure of the profit for the year. The liability of warranty cost therefore cannot be said to contingent at all. But it is necessary that such provision of warranty expenditure is made on some scientific basis so that the estimate of provision made by the assessee can be said to be a reliable estimate of such liability. Estimates of the warranty provision depends upon a different industry in which assessee operates. There may be different manner of making a provision because of warranty services in different industry. There cannot be straightjacket formulae for warranty ....
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....ive the best picture with the original provision made by the assessee's reliable estimate or not. Further as the sale prices has been booked into the profit and loss account the corresponding expenditure on account of warranty expenses are also a liability in present and therefore it cannot be said that it is a contingent liability wherein the contract with the customers the clauses of warranty are existing. Therefore, it is an allowable expenditure. In fact, there cannot be any doubt that the assessee is eligible for deduction of warranty expenditure. The only dispute is whether the claim made by the assessee is a reliable estimate or not but in any case, it cannot be nil. Qualification in the audit report with respect to quantificatio....