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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 ..... Thus, on the aforesaid basis the tribunal has recorded a finding that the provision for warranty made by the assessee is on scientific basis and method and has allowed the claim for deduction on account of warranty. The aforesaid finding of fact has not been demonstrated to be perverse by the learned counsel for the revenue. Neither any averment has been made in the memo of appeal with regard to perversity of the finding recorded by the tribunal nor the same could be demonstrated at the time of hearing of the appeal. The tribunal has rightly relied on the decision rendered by the Supreme Court in ROTORK CONTROLS INDIA PVT. LTD. supra. Similar view has been taken by a division bench of this court in IBM LTD. [ 2013 (10) TMI 1225 - KARNATAKA HIGH COURT] Therefore, the first and second substantial questions of law are answered against the revenue and in favour of the assessee. Deduction in respect of expenditure incurred under the head of marketing support fee and transaction support fee - HELD THAT:- Tribunal has held that the services rendered by the IBM are for smooth carrying of business for a period of five years and it might give an enduring benefit to the assessee but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 support fee' to acquire goodwill and to eliminate the competition which is capital in nature and having enduring benefit and not be allowed as an expenditure under Section 37(1) of the Income-Tax Act? . 2. Facts leading to the filing of this appeal briefly stated are that the assessee is a company engaged in the business of manufacture, import, marketing, distribution and export of information technology systems. The assessee is a wholly owned subsidiary of Lenovo Asia Specific Limited, Hong Kong. The assessee filed the original return of income for the Assessment Year 2007-08, declaring a total loss of ₹ 12,07,27,227/-. Subsequently, a revised return was filed on 10.10.2008 declaring loss at ₹ 34,15,93,500/-. The return was processed under Section 143(1) of the Act. The case of the assessee was selected for scrutiny and therefore, notice under section 143(2) of the Act was issued on 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a view to acquiring an enduring benefit for its business and therefore, the expenditure was capital in nature and could not have been allowed under Section 37(1) of the Act. In support of aforesaid submissions, reliance has been placed on 'ROTORK CONTROLS INDIA (P). LTD. V. COMMISSIONER OF INCOME-TAX, [2009] 180 Taxman 422 (SC), RENOWNED AUTO PRODUCTS MFRS. LTD. V. INCOME-TAX OFFICER, [2013] 40 TAXMANN.COM 13 (MADRAS), SHARP BUSINESS SYSTEM V. COMMISSIONER 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of provision for warranty has placed reliance on the order passed in the assessee's own case for Assessment Year 2011-12 dated 21.10.2016 and has held that the assessee had taken over the business from IBM which had substantial experience in such business and if the assessee has relied on the methodology adopted by the IBM for working out the warranty provision, the same cannot be said to be incorrect. It has further been held that assessee had made provision for warranty based on machine months and the aforesaid method cannot be held to be not scientific. It has also been held that the assessee has fulfilled the three conditions set out by the Supreme Court in ROTORK CONTROLS INDIA (P) LTD. supra. Thus, on the aforesaid basis the tribunal has recorded a finding that the provision for warranty made by the assessee is on scientific basis and method and has allowed the claim for deduction on account of warranty. The aforesaid finding of fact has not been demonstrated to be perverse by the learned counsel for the revenue. Neither any averment has been made in the memo of appeal with regard to perversity of the finding recorded by the tribunal nor the same could be demons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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