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2019 (1) TMI 1644 - AT - Income TaxDisallowance of provision for warranty - HELD THAT:-The appellant has relied on the decision of the Hon’ble Delhi High Court in case of CIT vs. Ericssion Communication P. Ltd. [2009 (9) TMI 710 - DELHI HIGH COURT]. As observed that it could be that in particular year actual warranty claim may exceed the provisions which is made. Assessee was therefore, entitle deduction in respect of provisions for warranty claims. The appellant has relied on Kirloskar Borthers Ltd. [2014 (9) TMI 1065 - ITAT PUNE] wherein provision for warranty were fully allowed. The crux of these judicial pronouncements are that provisions for warranty are full allowable. The only thing is that the estimation of the provisions for warranty should be on scientific basis. The appellant has calculated provisions of warranty on the basis of warranty period, actual expenditure on warranty. The obligation of warranty starts at the point of sale itself. Provisions for warranty is allowable and disallowable made by the AO cannot be upheld - Decided in favour of assessee.
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