9911796707
TMI Blog2012 (8) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... .22,79,776/- on account of provision of warranty claim. Assessee submitted that provision for warranty claim was allowable in view of judgment of Hon'ble Supreme Court in case of Rotork Controls India (P) Ltd. vs. CIT (314 ITR 62). The AO however did not accept the contention raised. It was observed by him that the assessee was following mercantile system of accounting under which the claim could be allowed only when the liability had been incurred during the year. In this case, as per AO, liability had not crystallized and was a mere provision. The AO therefore, disallowed the claim. 2.1 In appeal, the assessee again reiterated the submission that the claim was allowable in view of the judgment of Hon'ble Supreme Court in the case of Rot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had given a detailed note, a copy of which has been placed at page-3 of the paper book in which details regarding warranty had been given which was available before both the authorities below. In the said note, the assessee had clearly mentioned that all equipments sold and supplied were under warranty and warranty period ranged from 12-14 months from commissioning of the equipments sold and supplied. The period of warranty commenced from the date of commissioning of the equipment. The assessee had also mentioned in the note that it was making provision of warranty claim @ 2% and in case the same was found to be excessive compared to actual value in future, excess was offered as income. The assessee had also filed detailed calculati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the manufacture of foundry moulding plants and sand preparation plants. The assessee under the provisions of contract with the buyers of the equipments had made provisions for warranty in the year of sale of equipments. The AO has not allowed the claim on the ground that the assessee was following the mercantile system of accounting in which only those claims could be allowed in respect of which liability had been incurred by the assessee during the year. In this case the liability would arise in future when the defects are found in the equipments and therefore, it was of the nature of contingent liability. CIT(A) has confirmed the order of AO. The assessee had placed reliance on the judgment of Hon'ble Supreme Court in the case of Roto ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
