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2013 (5) TMI 275 - AT - Income TaxAddition u/s 14A - CIT(A) deleted the addition - Held that:- On one hand assessee claims that no expenditure was incurred for earning dividend income and on the other hand, disallows suo moto Rs.1 lac towards earning such income. AO has to reject the claim of assessee and apportion the expenditure on reasonable and acceptable method. Thus this issue required to be restored to the file of the Assessing Officer to decide afresh - revenue’s appeal is allowed for statistical purposes. Provision for warranty expenses - CIT(A) deleted the addition - Held that:- The assessee company is doing the business of computer software and trading of bought out products. The company also produces softwares to its customers as per their specifications. Thus, the assessee has to provide performance guarantee and for the same, the clauses for warranty is provided. Thus, the sales and warranty were inextricably related to each other. The assessee company is maintaining the accounts on the mercantile system. The liability for warranty expenses is a committed liability at the very initial stage of the sales. The amount of provision based on past experience exhibits a direct nexus between the claim for provision and obligation arising under the warranty clause. Thus it can be said that it is a liability which has arisen in the relevant year though its actual quantification and discharge is deferred to a future date. The facts on the record also do not show that such provision has been made for evading the tax - no fault in the order of CIT (A) - Against revenue.
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