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TMI Blog2025 (1) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... unt as the amount disallowable during the year. Even though these details were filed before the AO it seems that he has overlooked the submissions filed by the assessee. Considering the details of actual break up of warranty supplied during the year and the customer-wise break up of bad and doubtful debts written back during the year which are majorly the limited companies and mainly include Tata Motors Ltd. and Ashok Leyland Ltd. etc., find that the claim of the assessee was justified and CPC erred in making the alleged adjustments. Therefore set-aside the finding of the CIT(A) and delete the disallowances made u/s. 37 and allow the effective Grounds raised by the assessee. - Dr. Manish Borad, Accountant Member For the Assessee : Shri Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the disallowance for the warranty expenses amounting to Rs. 12,32,732 without appreciating the fact that these are actual settlement of warranty expenses with the customers of the Appellant. Erred on the facts in circumstances of the case and in law by not considering the submission of the Appellant explaining that the provision for warranty is disallowed by the Appellant and the said deduction claimed is on account of actual warranty payment/settlement with the customers of the Appellant. 3. Brief facts of the case are that the assessee is a company incorporated under the provisions of Indian Companies Act, 1956. It is engaged in the business of manufacturing of parts and accessories of commercial automobile vehicles like Exhaust system ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mental Representative vehemently argued supporting the order of the ld.CIT(A) and also referred to the observations of ld.CIT(A) in para 5.10 of the impugned order wherein the ld.CIT(A) has affirmed the adjustment made by CPC observing as under : 5.10. Disallowance Contingent liability of Rs. 48,92,928/-: The appellant states that in the return of income it had disallowed Rs. 23,88,412/- u/s. 37 as being liability contingent in nature at Sl.No.7(i) in Part-A O.I. and this amount is seen to have been disallowed in Schedule B P which is included to total amount of Rs. 85,02,188/- at Sl.No.15. However, in the Audit Report, the auditor reported at Clause 21(g) for disallowance as under : Sl.No. Particulars Rs. 1 Provision for Doubtful Debits 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to Rs. 48,92,929/-. Also, in view of the discrepancy with regard to the amount of contingent liability between the Audit Report and Return of income, the addition made of Rs. 48,92,929/- is confirmed. The appellant's ground on this issue is dismissed. 6. I have heard the rival contentions and perused the record placed before us. The assessee has raised two issues in the instant appeal of which first relates to disallowance of Rs. 36,60,197/- u/s. 37 of the Act for the alleged disallowance of provision for Bad debts written back and second relates to disallowance of warranty provision amounting to Rs. 12,32,732/-. The total addition/disallowance referred to in the grounds of appeal amount to Rs. 48,92,929/-. I further observe fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision for doubtful debts and provision for warranty expenses debited in the profit and loss account at Rs. 46,98,270/- and Rs. 25,83,071/-. Thus, added back Rs. 72,98,341/- to the net profit as per profit and loss account. Thereafter, the assessee being eligible to claim the actual amount of bad debts written off during the year at Rs. 36,60,197/- and the actual amount of warranty expenses incurred during the year at Rs. 12,32,732/- has been reduced from the net profit as per profit and loss account. So in nutshell, the assessee has added back Rs. 23,88,412/- (Rs.72,81,341 - Rs. 48,92,929) to the net profit as per profit and loss account. I find that the assessee has rightly computed the disallowable item under the excess of provision f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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