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2021 (4) TMI 808 - ITAT DELHIDisallowance being provision made for warranty expenses - AR pointed that Appellant had created the provision on the basis of past history and was based on a scientific and reliable method and as such, the disallowance sustained by the Ld. CIT(A) deserves to be deleted- HELD THAT:- Variation in the methods adopted for the provision for warranty has not been clearly set out after 2010-11 by the assessee. CIT (Appeals) has rightly held that the assessee has not made a reliable estimate of amount of provision on the basis of past historical trend of warranty claimed. The assessee itself has admitted that due to up-gradation of technology, the defects in components were minimized and, therefore, warranty claim were substantially reduced. But in subsequent assessment year 2013-14, the assessee reversed the provision keeping in mind the quantum of brought forward of provision of warranty amount and which reduced the actual claim during the year. In assessment year 2013-14 the utilization of provision during the year from opening provision, balance figure also became a negative figure. Therefore, it clearly establishes that assessee had not been stick in making the provision for warranty at the end of financial year under consideration when it had all the available facts relating to warranty claim made and historical trend of available claim as laid down in the case of Rotork Controls India Pvt. Ltd[2009 (5) TMI 16 - SUPREME COURT] The assessee’s warranty provision equally lack in the proper accounting / calculating factors and, therefore, the claim of the assessee is not sustainable. The CIT (Appeals) has rightly rejected the set off of actual warranty expenses on payment basis as well as warranty expenses on payment basis. - Decided against assessee.
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