Gujarat High Court
Commissioner Of Income Tax -Ii vs Inductotherm (India) Pvt. Ltd. - ... on 27 December, 2011
Author: Sonia Gokani
Bench: Akil Kureshi, Sonia Gokani
TAXAP/2087/2010 1/4 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 2087 of 2010
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COMMISSIONER OF INCOME TAX -II - Appellant(s)
Versus
INDUCTOTHERM (INDIA) PVT. LTD. - Opponent(s)
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Appearance :
Mr MANISH R BHATT Sr Advocate with Mrs MAUNA M BHATT for Appellant
None for Opponent
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CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MS JUSTICE SONIA GOKANI
27th December 2011
ORAL ORDER (Per : HONOURABLE Ms..JUSTICE SONIA GOKANI)
Following are the questions proposed by the Revenue in the present Tax Appeal challenging the judgment and order of the Income Tax Appellate Tribunal, Ahmedabad {"Tribunal" for short} dated 22nd January 2010.
{A} "Whether the Appellate Tribunal is right in law and on facts in deleting the disallowance of warranty provision expenses of Rs. 46,13,116/= even though the same was contingent liability ?"
{B} "Whether the Appellate Tribunal is right TAXAP/2087/2010 2/4 ORDER in law and on facts in allowing deduction u/s. 80IA in respect of the interest income of Rs. 4,46,633/= [at 80.6% of Rs. 5,54,136/=] earned on late collection of sales proceeds though the same is not derived from activities carried on by the industrial undertaking ?"
{C} "Whether the Appellate Tribunal is right in law and on facts in directing to exclude sales tax and excise duty from the total turnover for the computation of deduction u/s. 80HHC even after insertion of Section 145A of the Act ?"
Question {A} pertains to deletion of disallowance of warranty provision expenses to the tune of Rs. 46,13,116/= which was otherwise claimed to be contingent liability. On hearing learned counsel Shri Manish Bhatt for the Revenue, who has candidly pointed out that a similar issue has been decided by this Court in Tax Appeal No. 1952 of 2010 against the Revenue, following the decision of Supreme Court in case of Rotork Controls India (P) Limited v. Commissioner of Income Tax, reported in [(2009) 314 ITR 62 (SC)] in the following manner :-
"2. From the orders on record, which we have perused with the assistance of the TAXAP/2087/2010 3/4 ORDER learned counsel for the Revenue, we find that the Tribunal has relied on the decision in the case of Rotork Controls India P. Limited v. Commissioner of Income Tax, reported in [2009] 314 ITR 62 (SC), wherein, the assessee which had made the provisions for warranty was granted the benefit by the Apex Court by reversing the orders of the High Court observing that the warranty had become integral part of the sale price. In other words, the warranty stood attached to the sale price of the product and in that view of the matter, the warranty provision had to be recognized because the assessee had presented obligation as a result of past events resulting in an outflow of resources and relateable estimate could be made of the amount of obligation.
3. Since the issue is covered in favour of the assessee by virtue of the said decision, we see no reason to entertain the Revenue's Appeal. Tax Appeal is, therefore, dismissed."
The issue being identical, without independently giving any reasons, this question is not being entertained.
As far as Questions {B} & {C} are concerned, they are both admitted earlier as substantial questions of law.
Tax Appeal is admitted for consideration of Questions {B} TAXAP/2087/2010 4/4 ORDER & {C} as the substantial questions of law.
To be heard with Tax Appeal No. 1085 of 2008.
{Akil Kureshi, J.} {Ms. Sonia Gokani, J.} Prakash*