9911796707
TMI Blog2014 (3) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has dismissed the appeal filed by the Revenue. 2. The Revenue has raised the following substantial questions of law in the instant appeal: Whether the Tribunal was correct in holding that a sum of Rs.4,96,60,442/- being a "provision made for warranty" liability in respect of products sold is not a contingent liability but should be allowed as a revenue expense despite the same having not incurred during the assessment year? 3. At the outset, Mr. K.P. Kumar, learned Senior Counsel for the assessee invited our attention to the judgment of the Supreme Court in ROTORK CONTROLS INDIA (P) LIMITED v/s COMMISSIONER OF INCOME-TAX, CHENNAI in (2009) 314 ITR 62 (SC) and so also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these observations and following the observations made by the Supreme Court in paragraph 13, Mr. Aravind, learned counsel appearing for the Revenue submitted that to find out whether all the tests laid down by the Supreme Court stand satisfied in the present case, it deserves to be remanded to the Tribunal. Relevant observations in paragraph 13 read thus: "A detailed assessment of the warranty provisioning policy is required particularly if the experience suggests that warranty provisions are generally reversed if they remained unutulized at the end of the period prescribed in the warranty. Therefore, the company should scrutinize the historical trend of warranty provisions mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing which relates to present obligation, it arises out of obligating events, it involves outflow of resources and lastly it involves reliable estimation of obligation. Keeping in mind all the four aspects, we are of the view that the High Court should not to have interfered with the decision of the Tribunal in this case". 5. In support of this contention, he invited our attention to the following facts of the present case:- In Schedule-XIV to the Profit and Loss Account, the assessee had debited an amount of Rs.45,64,21,746/- as "provision for warranty". The assessee, in fact, had spent an amount of Rs.40,56,50.088/- towards warranty. In addition, the year end expenses which had accrued on this count amounts to Rs.11,11,216/-, hence, from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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