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TMI Blog2015 (5) TMI 869X X X X Extracts X X X X X X X X Extracts X X X X ..... - SUPREME Court] wherein held that the liability on the assessee having been imported, the liability would be an accrued liability and would not convert into a conditional one merely because the liability was to be discharged at a future date. There may be some difficulty in the estimation thereof but that would not convert the accrued liability into a conditional one; it was always open to the tax authorities concerned to arrive at a proper estimate of the liability having regard to all the circumstances of the case. Also see Rotork Controls India P. Ltd. v. Commissioner of Income Tax [ 2009 (5) TMI 16 - SUPREME COURT OF INDIA] 314 ITR 62 (SC)- Decided in favour of assesse. - Income Tax Appeal No. 434 of 2014, Income Tax Appeal No. 439 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-assessee and against the appellant-revenue. 4. In our view a substantial question of law does not arise. In any event, the questions are answered in favour of the respondent-assessee in view of the judgment of a Division Bench of this Court and by a judgment of the Supreme Court. 5. The respondent filed a return of income of 11,72,00,980/-. The revised return declared the same income. The assessment was completed under section 143(3) of the Income Tax Act, 1961 (for short the Act ) at a total income of 11,64,04,200/-. The assessee had debited an amount of 2,66,33,000/- on account of warranty expenses in the Profit and Loss account. The respondent stated that the warranty costs were determined on the basis of the past exper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a liability that may or may not have to be discharged, the Assessing Officer added the amount of 60,25,000/- back to the respondent s net income and initiated penalty proceedings under section 271(1)(c) of the Act. The C.I.T. (A) allowed the respondent s appeal. The Income Tax Appellate Tribunal dismissed the appellant s appeal leading to the appellant s filing the present appeals. 8. The respondent follows the mercantile system of accounting. The warranty expenses are therefore included in the Profit Loss account. It is not disputed that the entry in this regard is reversed and the amount is added to the Profit Loss account if the expenses towards meeting the warranty are not actually incurred for any reson upon the expiry of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt by the judgment of a Division Bench of this Court in the case of Commissioner of Income Tax v. Majestic Auto Ltd. [2006] 156 Taxman 460 (P H) which was also relied upon by the Tribunal. The Division Bench held as under:- 6. In Bharat Earth Movers case (supra), Hon'ble the Supreme Court dealing with the proposition that the assessee would be entitled to deduction in the accounting year, although the liability may have to be quantified and discharged at a future rate, held that such a liability is to be treated in the present time and would not be contingent liability. It was held as under: So is the view taken in Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC) wherein this Court has held that the liability on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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