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2015 (4) TMI 326 - GUJARAT HIGH COURTAddition made under the head provision made on account of warranty which is in the nature of contingent liability - ITAT deleted the addition - Held that:- The issue involved in this appeal is already concluded by a judgment in the case of Rotork Controls India Pvt. Ltd. v. Commissioner of Income Tax, [2009 (5) TMI 16 - SUPREME COURT OF INDIA] wherein the assessee was engaged in the business of manufacture of valve actuators, which were sophisticated goods. The statistical data indicated that every year some of these were found defective. The valve actuator, being a sophisticated item, no customer was prepared to buy it without a warranty. Therefore, the warranty became an integral part of the sale price. In other words, the warranty stood attached to the sale price of the product. It was held that warranty provisions had to be recognized because the assessee therein had a present obligation as a result of past events resulting in an outflow of resources and a reliable estimate could be made of the amount of the obligation. Therefore, the assessee therein had incurred a liability during the assessment year which was entitled to deduction u/s.37 of the Income-tax Act, 1961. - Decided against revenue.
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