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2013 (10) TMI 155 - HC - Income TaxAllowability of warranty expenses in excess of the provision of warranty - Assessee deals in manufacturing of machines and spares/components and the warranty requires replacement of spares, which is replaced by the assessee and debited to spare account, therefore, the assessee would not be required to bear warranty expenses separately – Held that:- Though, assessee had not produced any scientific method for arriving at the estimation of the warranty liability, in the present case, salient features are that the assessee had a gross sale of Rs.9722.32 lakhs during the year under consideration and the provision for warranty was calculated @ 0.5% thereof. Actual warrant expenditure during the same period was to the tune of Rs.177.17 lakhs. In the previous period also, consistently, the actual expenditure exceeded the provision made for warrant - Assessee had produced various details of the past working out provisions, which form the basis for the present year. In that view of the matter – Decided against the Revenue.
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