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2014 (1) TMI 1354 - AT - Income TaxDeletion of disallowance of provisions for warranty – Held that:- The FAA had given a finding of fact that assessee was following a scientific method based on the past experience - for arriving at the conclusion that a logical system was followed by the assessee, FAA had considered the chart submitted by the assessee – The decision in Court in the case of Rotork Controls India P. Ltd Versus Commissioner of Income Tax, Chennai [2009 (5) TMI 16 - SUPREME COURT OF INDIA] followed - if the historical trend indicates that a large number of sophisticated goods were being manufactured in the past and the facts show that defects existed in some of the items manufactured and sold, then provision made for warranty in respect of such sophisticated goods would be entitled to deduction from the gross receipts under section 37 – thus, the opinion of FAA is correct – Decided in favour of Assessee. Deletion of adjustment in book profits u/s 115JB of the Act - Provision of warranty, gratuity and leave encashment adjustment – Held that:- The decision in Deputy Commissioner of Income-tax, Circle 1(2), Baroda Versus Inox Leisure Ltd. [2013 (2) TMI 353 - GUJARAT HIGH COURT] followed - addition of gratuity as unascertained liability under clause (c) to explanation 1 to section 115JB was not warranted - The provision for warranty is an ascertained liability and cannot be added back for computing book profit u/s.115JB of the Act - provision towards leave encashment of employees was unascertained liability and added it book profit - The Tribunal had rightly held that provision for leave encashment could not be considered contingent liability for computing book-profit u/s.115JB of the Act – Decided against Revenue.
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