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TMI Blog2015 (6) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... from past events existing independently of the future conduct of the business of the enterprise that is recognized as provision. For a liability to qualify for recognition there must be not only present obligation but also the probability of an outflow of resources to settle that obligation. Where there are a number of obligations (e.g. product warranties or similar contracts) the probability that an outflow will be required in settlement, is determined by considering the said obligations as a whole. Addition made being 5% of the dealer concession and incentives - Held that:- When the assessee claimed expenditure, it should be established that the expenditure was incurred for wholly and exclusively for the purpose of business. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 26.9.2014 for the assessment years 1998-99, 2001-02, 2003-04 and 2004-05. Since, the issues involved in these appeals are common, they are clubbed together, heard together and disposed off by this common order for the sake of convenience. 2. The first common ground taken in these appeals is with regard to deletion of disallowance made by the Assessing Officer in respect of provision for warranty without examining the facts of the case. 3. Since facts are common in all these appeals, we consider the facts as narrated in assessment year 1998-99. The assessee claimed a sum of ₹ 3,15,93,392/- as product warranty expenses. The assessee stated that the company extends a one year warranty for all its products. The expenses shown u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5.2010 for the assessment year 1999-2000. Against this, the Revenue is in appeal before us. 5. We have heard both the sides and perused the material on record. As observed by the CIT (A), the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee s own case, wherein the Tribunal considered the issue and observed as under 4: 4. At the time of hearing, it was brought to the notice of the Bench that the above decision has been reversed by the Hon ble Supreme Court by its decision reported in 223 CTR 425 which is also reported in 23 DTR 79, by holding as under: A provision is a liability which can be measured only by using a substantial degree of estimation. A provision is recognized when: (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent proceedings are invalid, if the issue on which the addition made was not the part of reopening and the issue on which the assessment reopened, no addition was made. Since, we have already held that deletion of warranty is valid in this assessment year and there is no addition sustained in respect of warranty, there is no necessity of reopening and ground relating to reopening is only academic. Accordingly, the same is dismissed as infructuous. 7. The next ground in ITA No.2979/Mds/14 is that the CIT(A) erred in deleting the addition made by Assessing Officer being 5% of the dealer concession and incentives of ₹ 1,04,63,000/-. The AO disallowed 5% of the expenditure towards dealer concession and incentive as the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se was referred to the Transfer Pricing Officer since the international transaction was more than ₹ 5 crores. The Transfer Pricing Officer passed an order uls 92 CA(3) of the IT Act on 15.12.2008 vide C.R.No.65/TPO-I/AY 2004-05, the same was received in this office on 18.12.2006. Under the provisions of Sec.92 CA(4) , the assessee had to be given an opportunity of being heard. The Transfer Pricing Officer in his above referred order has determined that the total income of the assessee requires an upward adjustments to the extent of ₹ 44,66,883. In view of this, a show cause letter was issued on 20.12.2006 requiring the assessee as to why this total income should not be upwardly adjusted by ₹ 44,66,883. The case was posted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an addition of ₹ 44,66,883/- on the basis of TPO s order. Against this, the assessee went in appeal before the CIT(Appeals). 11. On appeal, the CIT(Appeals) after carefully considering the facts of the case and the submissions of the Id.AR, observed that the AO has tried to obtain the comments of the assessee on the TPO's order on upward adjustment of the value through his letter dated 20.12.06 and made subsequent efforts. On not receiving any response from the assessee, the AO has adopted the revised figure of the TPO and made the addition of ₹ 44,66,883. The AO therefore cannot be found fault with and he has not offered sufficient opportunity to explain the revised estimate of the TPO. According to him, the argument of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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