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TMI Blog2013 (9) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. Amol Sinha, Sr. Standing Counsel & Mr. Rahul Kochar, Advocate. ORDER Sanjiv Khanna, J. (Oral): Having heard counsel for the parties, the following substantial question of law is framed:- "Whether the Income Tax Appellate Tribunal was justified in disallowing actual warranty expenses of Rs.12,53,441/- and Rs.48,54,522/- on account of provision for warranty?" 2. Learned counsel for the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Income Tax versus Whirlpool of India Limited, 2011 (242) CTR (Del) 245 wherein it has been observed that provision for warranty should be based on actuarial valuation with reference to the products sold during the year. This amount can be treated as expenditure under Section 37(1) on the principle of matching. Further, depending upon the past history, the quantum of provision for warranty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,31,167/- + Rs.12,53,441/-). However, provision for warranty expenses was made for Rs.48,54,522/-. In other words, the assessee in the profit and loss account had debited an amount of Rs.61,07,963/- (Rs.48,54,522/- + Rs.12,53,441/-). The tribunal in paragraph 26 of the impugned order has noticed that the appellant had made provision for warranty on sales for a period of eighteen months for the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic basis and it cannot be on mere ipsi dixit. This is clear from the two decisions in Woodward Governor India Limited (supra) and Whirlpool of India Limited (supra). In the last decision it has been held that provision for warranty has to be on actuarial valuation. 9. In view of the aforesaid position, we feel that the matter requires in-depth and proper factual examination by the adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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