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warranty has been duly accepted as revenue expenditure by the Hon'ble Gujarat High Court in case of Pr.CIT vs. Hitachi Home & Life Solution (I) Ltd. Tax Appeal No. 1236 of 2018 judgment dated 09.10.2018. The provision for warranty expenses has been held to be allowable expenditure by the Hon'ble supreme Court in Rotork Controls India Pvt. Ltd. vs. CIT [2009] 314 ITR 62 [SC] as referred to and relied upon by the CIT(A).

5. We have heard the rival submissions. We find that the CIT(A) has examined the issue threadbare and also took note of the basis of calculation of warranty provisions. The relevant operative para of the order of the CIT(A) is reproduced hereunder:

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79. We have heard the parties. The assess ee has to submit present value of war ranty expenses. It has to be pr operly ascertained and discounted on accrual basis. A proper I T A N o . 2 0 1 4 / Ah d / 1 6 [ D C I T v s . GM M P f a u l d e r Lt d . ] A. Y . 2 0 0 5 - 0 6 - 4 -

calculation of this issue will he submitted to the AO who will examine the s ame and allow the claim as per decision of Hon. Supreme Court in Rotork Controls India (P) Ltd. (supra) ax above, Thi s ground of Revenue is allowed but for statistical purposes. "

4.6. Thereafter, against the order of CIT(A) on the appeal of revenue, the Hon'ble ITAT, Ahmedabad has directed the AO la examine the cal culation of warranty expenses i n view of the judgment of Hon'ble Supreme Court in Rotork Controls India Pvt. Ltd. However, the disallowance was once again made by the AO stating that no scientific or other basis for provision has been adopted. Thus the expenditure was in the nature of contingent liability. The appellant submitted that the working of the provi sion has been made applying 0.5 % constant factors to the sales made in the current year and based on t he expense incurred in respect of sales made, the appellant has worked out the average of the expenditure during warranty period in last three years which have been reproduced in the preceding I T A N o . 2 0 1 4 / Ah d / 1 6 [ D C I T v s . GM M P f a u l d e r Lt d . ] A. Y . 2 0 0 5 - 0 6 - 6 -

In view of the above discussion, the disallowance made by the AO i s directed to be deleted as the provisions made by the appellant ar e in order and have been made by following a scientific and systematic method as held by the honourabl e Supreme Court in the case of Rotork Control s India Private Li mited.
The ground of appeal is accordingly allowed."

4.7. It has also been noticed that in appellant's own case in A. Y. 2006-07 to 2008-09, the ld.CIT(A) has allowed the appeal of the appellant or this issue. On the contrary in A. Y. 2009-10, the excess provision for warranty was credited in the P & L Account by t he appellant which has been accepted by the AO. Further, in A. Y. 2010- 11, the ld.CIT(A) has allowed the appeal on this issue and the disallowance made was deleted. As per appellant the said decision has been accepted by the department and no second appeal before t he Hon'ble ITAT, Ahmedabad has been preferred.