9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 211 - AT - Income TaxDisallowance of provisions for replacement & warranty charge u/s.37 - CIT(A) deleted the addition - Held that - As decided in assessee s own case on similar issue 2015 (12) TMI 822 - ITAT AHMEDABAD hile deleting the addition ld.CIT(A) has accepted the contention of the Assessee that it was having present obligation as a result of past events resulting in a outflow of resources. Ld.CIT(A) has further given a finding that the method of accounting followed by the Assessee in respect of warranty provisions is consistent and is based on definite scientific method and that the provision of warranty made by the Assessee was not a contingent liability. Before us, Revenue could not controvert the finding of ld.CIT(A) and we therefore find no reason to interfere with the order of ld.CIT(A) - Decided against revenue
Issues:
1. Disallowance of provisions for replacement & warranty charge u/s.37 of the Act. 2. Upholding the order of the Assessing Officer. 3. Authorization of representation in the case. 4. Allowability of provisions for warranty. Analysis: Issue 1: Disallowance of provisions for replacement & warranty charge u/s.37 of the Act The Revenue challenged the deletion of disallowance of Rs. 18,00,000 made by the Assessing Officer on account of provisions for replacement & warranty charge u/s.37 of the Act. The Ld.CIT(A) decided the issue in favor of the assessee, citing a present obligation as a result of past events leading to an outflow of resources. The method of accounting followed by the assessee was deemed consistent and based on a definite scientific method. The ITAT upheld the order of the Ld.CIT(A) as the Revenue failed to provide any evidence to contradict the findings, resulting in the dismissal of the Revenue's appeal. Issue 2: Upholding the order of the Assessing Officer The Revenue contended that the Ld.CIT(A) should have upheld the order of the Assessing Officer. However, the ITAT found no reason to interfere with the Ld.CIT(A)'s decision as the facts of the case were identical to a previous case decided in AY 2008-09. Since there were no changes in the facts presented, the ITAT upheld the Ld.CIT(A)'s order, rejecting ground No.1 of the Revenue's appeal. Issue 3: Authorization of representation in the case During the hearing, no one appeared on behalf of the respondent-assessee. A letter submitted on behalf of the assessee lacked proper authorization, leading the ITAT to determine that the representation was without proper authorization. Despite this, the ITAT proceeded with the case based on the available information and submissions. Issue 4: Allowability of provisions for warranty The ITAT referred to a previous case in AY 2008-09 where a similar issue was decided in favor of the assessee. The ITAT upheld the Ld.CIT(A)'s order based on the consistency in facts and decisions, dismissing the Revenue's appeal. Ground Nos. 2 & 3 were considered general in nature and did not require independent adjudication, leading to the dismissal of the Revenue's appeal in its entirety. In conclusion, the ITAT dismissed the Revenue's appeal, upholding the Ld.CIT(A)'s decision regarding the disallowance of provisions for replacement & warranty charges under section 37 of the Act. The judgment highlighted the importance of consistency in decisions and the necessity of providing proper authorization for representation in legal proceedings.
|
