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TMI Blog2015 (12) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... e on account of provisions for replacement & warranty charges u/s. 37 - Held that:- While deleting the addition ld. CIT(A) has accepted the contention of the Assessee that it was having present obligation as a result of past events resulting in a outflow of resources. Ld. CIT(A) has further given a finding that the method of accounting followed by the Assessee in respect of warranty provisions is consistent and is based on definite scientific method and that the provision of warranty made by the Assessee was not a contingent liability. Before us, Revenue could not controvert the findings of ld. CIT(A) and we therefore find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed.- Decided against reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance of ₹ 13,00,000/- made by the Assessing Officer on account of provisions for replacement warranty charges u/s. 37 of the Act. 1st ground is with respect to deletion of ₹ 2,81,900/- on account of Entrance fees 4. During the course of assessment proceedings, A.O noticed that Assessee has paid ₹ 2,81,900/- as Entrance fees to Noida Golf Course Society to obtain corporate membership. A.O was of the view that the expense is not allowable u/s. 37 of the Act and accordingly disallowed the same. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:- 5.3 I have carefully considered the assessment order and the submission filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smooth and efficient running of business enterprises and that the expenditure was wholly and exclusively for the purpose of business. Before us, Revenue has not brought any material on record to controvert the findings of ld. CIT(A). We therefore find no reason to interfere with the order of ld. CIT(A) and thus the ground of Revenue is dismissed. 2nd ground is with respect to deletion of addition on account of warranty expenses 8. A.O on perusing the Profit and Loss Account noticed that Assessee had made provision towards replacement and warranty charges amounting to ₹ 13,00,000/-. The Assessee was asked to provide the evidence and justification of the same to which Assessee interalia submitted that it has provided 0.10% for the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut part of which was not utilized as there was no claim, is reversed or written back in the company profit loss account. Therefore, the provision of warranty made by the appellant is not a contingent liability as it has been made in direct proportion to the sale amount and was, therefore, inbuilt in the sale price. The provision was made on reliable estimate. The expenditure, is therefore, allowable u/s. 37 of the I. T. Act. The appellant has also rightly relied on the judgment of ITAT, Bangalore reported in 105 ITD 001 in the case of IBM India Limited Vs. CIT. The disallowance made by the A. O. u/s. 37 for provision for replacement and warranty-charges, is therefore, deleted. 9. Aggrieved by the aforesaid order of ld. CIT(A), Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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