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1 - 6 of 6 (0.26 seconds)M/S. Rotork Controla India (P) Ltd vs Commnr. Of Income Tax, Chennai on 12 May, 2009
D-E)
From the above charts which is referred by the Ld. AR it is clear that the
variation in the methods adopted for the provision for warranty has not been
clearly set out after 2010-11 by the assessee. The CIT (Appeals) has rightly
held that the assessee has not made a reliable estimate of amount of
provision on the basis of past historical trend of warranty claimed. The
assessee itself has admitted that due to up-gradation of technology, the
defects in components were minimized and, therefore, warranty claim were
substantially reduced. But in subsequent assessment year 2013-14, the
assessee reversed the provision keeping in mind the quantum of brought
forward of provision of warranty amount and which reduced the actual
claim during the year. In assessment year 2013-14 the utilization of
provision during the year from opening provision, balance figure also
became a negative figure. Therefore, it clearly establishes that assessee had
not been stick in making the provision for warranty at the end of financial
year under consideration when it had all the available facts relating to
warranty claim made and historical trend of available claim as laid down by
the Hon'ble Apex court in the case of Rotork Controls India Pvt. Ltd. Vs. CIT
(supra). The assessee's warranty provision equally lack in the proper
ITA. 2228 (Del) of 2017.
Messrs. Calcutta Company Ltd vs The Commissioner Of Income-Tax,West ... on 12 May, 1959
price then the assessee has to provide such warranty cost in its accounts for
the relevant year otherwise matching concept will be violated. The Ld. AR
relied upon the decision of the apex court in the case of Calcutta Co. Ltd.
Vs. CIT (1959) 37 ITR 1 (SC). The ld. AR further submitted that the assessee
company has provided for warranty expenses on the basis of actual claims
received from the customers in the past few years and under the matching
concept. If revenue is recognized, the cost incurred to earn the revenue
including the warranty cost has to be fully provided. The Ld. AR has given
computation of the subject years in which provision was made as under:-
Sassoon J. David & Co. (P) Ltd., Bombay vs C.I.T., Bombay on 3 May, 1979
7. As regards Ground No. 3 relating to disallowance of actual warranty
expenses amounting to Rs.10,74,034/- incurred during the subject
assessment year, the Ld. AR made the submissions as to without prejudice
stating therein that the provision of warranty amounting to Rs.7,37,150/-
should be allowed as in the case of the assessee actual warranty expenses
have not been separately debited to the profit and loss account and have
only been set off with the provision account only. The Ld. AR further
submitted that the actual expenses incurred in the normal course of the
conduct of business and are wholly and exclusively for the business of the
assessee. Such expenses constitute an allowable expense under Section 37
of the Income Tax Act, 1961 (the Act). The provisions of Section 37(1) of the
Act prescribes that any expenditure is allowable as a revenue expenditure if
it is not a capital expenditure, not a personal expenditure and has been
incurred wholly and exclusively for the purposes of its business. The Ld. AR
relied upon the decision of Sassoon J. David Vs. CIT (1979) 118 ITR 261 as
well as the decision of the Hon'ble Delhi High Court in the case of CIT Vs.
EKL Appliances Ltd. 341 ITR 241 (Del). Thus, the Ld. AR submitted that the
expenditure in respect of warranty was wholly and exclusively incurred by
the assessee for the purpose of its business and was not in the nature of
capital or personal nature and thus entitled to deduction under Section
37(1) of the Act.
Cit vs Ekl Appliances Ltd on 29 March, 2012
7. As regards Ground No. 3 relating to disallowance of actual warranty
expenses amounting to Rs.10,74,034/- incurred during the subject
assessment year, the Ld. AR made the submissions as to without prejudice
stating therein that the provision of warranty amounting to Rs.7,37,150/-
should be allowed as in the case of the assessee actual warranty expenses
have not been separately debited to the profit and loss account and have
only been set off with the provision account only. The Ld. AR further
submitted that the actual expenses incurred in the normal course of the
conduct of business and are wholly and exclusively for the business of the
assessee. Such expenses constitute an allowable expense under Section 37
of the Income Tax Act, 1961 (the Act). The provisions of Section 37(1) of the
Act prescribes that any expenditure is allowable as a revenue expenditure if
it is not a capital expenditure, not a personal expenditure and has been
incurred wholly and exclusively for the purposes of its business. The Ld. AR
relied upon the decision of Sassoon J. David Vs. CIT (1979) 118 ITR 261 as
well as the decision of the Hon'ble Delhi High Court in the case of CIT Vs.
EKL Appliances Ltd. 341 ITR 241 (Del). Thus, the Ld. AR submitted that the
expenditure in respect of warranty was wholly and exclusively incurred by
the assessee for the purpose of its business and was not in the nature of
capital or personal nature and thus entitled to deduction under Section
37(1) of the Act.
The Companies Act, 1956
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