2009 (1) TMI 926 - HC - Income Tax

Summary

Issues involved: Appeal u/s 260-A of the Income Tax Act 1961 against the order of the Income tax Appellate Tribunal regarding provision for warranty based on estimate as a deductible expense.

The High Court of Karnataka, in an appeal u/s 260-A of the Income Tax Act 1961, considered the question of whether a provision for warranty based on estimate, despite being a contingent liability, was allowable as a deduction. The court noted that a similar issue had been previously decided by a Division Bench in a judgment dated 21/09/2007. After careful consideration, the court found that the earlier judgment applied to the current case. The Division Bench had ruled in favor of the assessee, holding that the provision in question was indeed deductible. Following the precedent set by the previous judgment, the court concluded that the question of law in the present appeal must be answered in favor of the assessee and against the revenue. Consequently, the appeal was finally disposed of in favor of the assessee.