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TMI Blog2021 (2) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2007-08. The appeal was admitted by a bench of this Court vide order dated 14.01.2020 on the following substantial questions of law: "(i) Whether, the Tribunal is right in law and on facts in allowing the claim of the respondent towards the 'Provision of warranty' despite the fact that the utilization of the provision is ranging from as low as 22% to 72% which shows that the provision is not quantified on scientific basis? (ii) Whether, in the facts and circumstances of the case, the Tribunal is right in relying upon the judgment in the case of M/s. Rotork Control India Ltd? (iii) Whether, in the facts and circumstances of the case, the Tribunal is right in allowing the 'Marketing Support Fee' and 'transition su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee thereafter approached the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal' for short). The Tribunal by an order dated 31.03.201, inter alia placing reliance on the decision of the Supreme Court in ROTORK CONTROLS INDIA PVT LTD VS. CIT 314 ITR 62 (SC) and taking into account the decision of the Tribunal in the case of the assessee itself for the Assessment Year 2011-12 held that provision for warranty made by the assessee is based on scientific basis. Accordingly, the claim of the assessee on account provision for warranty was allowed. The Tribunal, also allowed the claim with regard to market support fee and transition support fee as an expenditure under Section 37(1) of the Act. In the aforesaid fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SIONER OF INCOME-TAX III, [2012] 27 TAXMANN.COM 50 (DELHI), COMMISSIONER OF INCOME-TAX V. MICRO LAND LTD., [2012] 18 TAXMANN.COM 80 (KAR.) 5. On the other hand, learned Senior counsel for the assessee submitted that the assessee had made a provision for warranty on a scientific basis and therefore, the Tribunal has rightly held that the assessee was entitled to deduction under Section 37 of the Act. It is further submitted that the tribunal being the last fact finding authority, has rightly held that the pre-requisites as laid down in ROTORK CONTROLS INDIA (P) LTD. supra have been fulfilled by the assessee. It is also urged that the finding recorded by the Tribunal that provision for warranty made by the assessee is on scientific basis is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (INDIA) P. LTD., V. DEPUTY COMMISSIONER OF INCOME-TAX in IT(TP)A NO.582/BANG/2015 dated 30.05.2016, COMMISSIONER OF INCOME TAX T.N. II II, MADRAS V. MADRAS AUTO SERVICE (P) LTD. (1998) 6 SCC 404, EMPIRE JUTE CO. LTD. V. COMMISSIONER OF INCOME TAX (1980) 124 ITR 3 (SC) 6. We have considered the submissions made by learned counsel for the parties and have perused the record. The Supreme Court in ROTORK CONTROLS INDIA (P) LTD. supra has laid down three tests for permitting a claim for deduction on account of a provision of warranty viz., (i) the assessee has to establish that there is a present obligation on account of past event, (ii) working out the probable estimate of the outflow of resources required and (iii) assessee has to substantia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by a division bench of this court in IBM LTD. supra. Therefore, the first and second substantial questions of law are answered against the revenue and in favour of the assessee. 7. Now we may advert to the third substantial question of law, which pertains to claim of assessee for allowing deduction in respect of expenditure incurred under the head of marketing support fee and transaction support fee. The tribunal by placing reliance on the order dated 14.08.2014 passed in case of assessee itself for Assessment Year 2006-07 and for 2008-09 has taken held that in the aforesaid years, the tribunal had taken into account the market support services to be delivered by IBM to the assessee and from perusal of the Article 2 of the agreement, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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