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2003 (9) TMI 11 - HC - Income TaxExpenditure accrued in the discharge of a liability - contingent liability vis-a-vis definite and ascertained liability - In the assessment for the years 1991-92, 1992-93 and 1993-94, the assessee claimed deduction of Rs. 3,50,000, Rs. 4,01,000 and Rs. 4,78,000, respectively, representing provision for after sales services based on the warranty issued at the time of sale of the transformers - For the assessment year, the assessee had made a provision of Rs. 3,50,000 but the actual expenses incurred for that year was Rs. 7,98,958. These circumstances clearly show that the provision is made on a reasonable basis. - Major portion of the transformers sold were defective and therefore a reasonable provision has to be made - Tribunal has rightly held that the provision made for the three years is based on an ascertained liability and that it cannot be treated as a contingent liability.
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