2012 (1) TMI 396 - AT - Income Tax

Summary

Issues involved: Appeal by department against CIT(A) order deleting addition for disallowance of provision of warranty debited to P & L Account.

Departmental Appeal:
- Grounds raised by department include deletion of addition amounting to Rs. 1,42,01,453 made on account of disallowance of provision of warranty.
- AO disallowed the claim based on lack of scientific basis for provision.
- Assessee argued provision was made in compliance with Accounting Standard 29.
- CIT(A) deleted the addition based on earlier order for A.Y. 2005-06.
- ITAT upheld CIT(A) decision citing similar facts to previous year's case.

Cross Objection by Assessee:
- No specific relief sought, only support for CIT(A) order.
- Cross objection deemed infructuous as department's appeal was dismissed and CIT(A) order upheld.

The ITAT Bangalore Bench, comprising Shri N.K. Saini and Smt. P. Madhavi Devi, heard the appeal by the department and cross objection by the assessee against the CIT(A) order dated 11.01.2011. The department's appeal focused on the deletion of addition related to disallowance of provision of warranty, amounting to Rs. 1,42,01,453. The AO disallowed the claim stating lack of scientific basis, while the assessee argued compliance with Accounting Standard 29. The CIT(A) deleted the addition based on an earlier order for A.Y. 2005-06, which was upheld by the ITAT citing similar facts. The cross objection by the assessee, supporting the CIT(A) order, was deemed infructuous as the department's appeal was dismissed and CIT(A) order upheld.