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TMI Blog2018 (9) TMI 1990X X X X Extracts X X X X X X X X Extracts X X X X ..... down by the Hon'ble Apex Court in the case of Rotork Controls India Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] . It is a settled legal principle that in any case where estimation is done based on scientific method and calculated properly, the provision made for warranty in respect of goods should be allowed u/s. 37 (1) - Decided in favour of assessee. - ITA No. 722/PUN/2016 - - - Dated:- 25-9-2018 - SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM For the Revenue : Shri S.K. Jadhav For the Assessee : Shri Ronak G. Doshi ORDER PER D. KARUNAKARA RAO, AM : This is the appeal filed by Revenue against the order of CIT(Appeals)- 4, Pune, dated 19.01.2016 for the Assessment year 2010-11. 2. The grounds raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter sales services ranging from 1 year to 18 months on the products sold by it. Assessee also stated that as per the provision of warranty, the same is in the range of 20% of the actual. The Assessing Officer did not accept the submissions of the assessee by holding as under: The contention is not acceptable on following grounds. No obligation was ever cast on the date of the sale and consequently there was no accrued liability. The liability had not crystallized on the date of the sale and, therefore, appellant is not entitled to deduction in respect of the provision made for warranty charges. The amount which is provided for or kept apart cannot be held to be expenditure, actually incurred and consequently deduction is not admissibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y expense, if properly ascertained and discounted on actuarial basis, can be an item of deduction u/s.37 of the I.T.Act. He also referred to the ratio laid down by the Hon'ble Apex Court in the case of Indian Molasses Co.(P.) Ltd. Vs. CIT (SC) reported as 37 ITR 66 in favour of the Revenue. The CIT(A) extracted the written submissions of the assessee, extracted the operative paragraphs from the Hon'ble Apex Court judgment in the case of Rotork Controls India ltd. (supra.), tabulated data relating to the matter of deciding this issue in the assessee s own case since assessment year 1998-99 onwards in Para 4 of his order and granted relief to the assessee. The CIT(A) also relied on the decisions of the Tribunals as well as judgments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon'ble Supreme Court in the case of Rotork Controls India Ltd.(supra.), wherein it has been held that a liability determined on a scientific basis cannot be regarded as a contingent liability and the provision made for warranty in respect of goods should be allowed u/s. 37(1) of the Act. Respectfully, following the decisions of Hon'ble ITAT E Bench, Mumbai in ITA Nos. 3677 8219/Mum/2004, Hon'ble Supreme Court in the case of Rotork Controls India Limited and the Apex Court in the case of Indian Molasses Co. (P.) Ltd., I have no hesitation in deleting the disallowance made by the AO on account of provision for warranty of ₹ 1,53,30,352/- and After Sales Cost of ₹ 3,95,09,000/-. Hence, ground No.1 stands adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. ITA No./ CIT(A) No. Relevant Para No./Pg. No. of the order Relevant Pg. of PB Remarks 1998-99 2790/M/03 Para 5/Page No.2 No appeal filed by the Department against the said disallowance before the Hon'ble Bombay High Court. 1999-00 5047/M/04 Para 2/ Page No.1 2000-01 3677/M/04 Para 21/Page No.6 2001-02 8219/M/04 Para 36/Page No.10 2002-03 N.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year, the Department accepted the said decision of the Tribunal and never filed appeal before the Hon'ble Bombay High Court. As such, decision of CIT (A) is, in principle, as per judgment laid down by the Hon'ble Apex Court in the case of Rotork Controls India Ltd. (supra.). It is a settled legal principle that in any case where estimation is done based on scientific method and calculated properly, the provision made for warranty in respect of goods should be allowed u/s. 37 (1) of the Act. Therefore, we are of the opinion that the order of the CIT(A) is fair and reasonable and the same does not require any interference. Accordingly, grounds raised by the Revenue are dismissed. 9. In the result, appeal of the Revenue is dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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