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2018 (11) TMI 600 - KARNATAKA HIGH COURTProvision of warranty - accounting policy - Held that:- Neither allowing the provision made for warrantees nor the actual expenses incurred by the company to be deducted from the profits of the company during the year is absolutely arbitrary and unscientific on the part of the assessing authority, to say the least. There was absolutely no basis for the assessing authority to make both the disallowances of provision for warranty as well as actual expenses at the same time in the hands of the assessee. In view of the comparison of actual expenses and provisions made for warranty, the details of which are given in the assessment order itself, we do not find any abnormal fluctuation or excess provision made by the assessee-company on this account. We are satisfied that the practice of making a provision for warranty in the present case has been found to be consistent, scientific and regular by the two appellate authorities below in consonance with the judgment of the hon'ble Supreme Court in the case of Rotork Controls India (P) Ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA). The hon'ble Supreme Court in the aforesaid case, discussed in detail how the accounting entries for product warranty are to be made by the assessee. Both the appellate authorities below were justified in returning the proper findings of facts on the relevant material before them and have rightly found that the provisions of warranty made by the assessee company was on the basis of the scientific and consistent method and therefore, the present appeal of the Revenue does not give rise to any substantial question of law and the same deserves to be dismissed and is accordingly dismissed.
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