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2018 (4) TMI 1122 - AT - Income TaxDisallowing of provisions(s) of five year warranty provision - whether provision made on as scientific and systematic basis? - Held that:- The assessee admittedly is a manufacturer of air conditioner cooling units. It appears to have provided for two kinds of warranties i.e. five years and one year. Case file suggests that the above latter warranty represents service charges paid to dealers which has gone unrebutted from Revenue side. Former five year warranty provision appears to be cost of compressor replacement in the event of the same being turning out to be a defective one. The assessee’s computation seems to be based on some products of model-wise number of units sold and per unit rate of five year warranty provision for the impugned assessment years. Coupled with this, it has also filed before us a detailed compilation chart of the impugned warranty provisions as well as sales figures of finished goods from financial year 2004- 05 to 2010-11 relevant amounts involved in two types of warranties DR fails to controvert the fact that the assessee has been following consistent method in creating similar warranty provision in subsequent assessment years as well. Relevant assessment order in such a case dated 30.04.2015 for assessment year 2011-12 indicates that there is no such disallowance made at the Revenue’s behest. The assessee is assessed at the same rate throughout. All the above narrated facts therefore make it crystal clear that the assessee has satisfied the relevant conditions for claiming the impugned warranty provisions as deduction Ad-hoc 10% disallowance on various expenditure being stores and spares, expenses on service operators and salary, wages and staff welfare expenses - Held that:- Assessee had produced all the relevant bills/vouchers in the first round of lower appellate proceedings (supra). The relevant issue is that on normal business expenditure wherein the Revenue has not made out any case of challenging its genuineness. We afforded sufficient opportunity to the learned Departmental Representative to rebut the CIT(A)’s above extracted findings under challenge deleting the impugned ad hoc disallowance in absence of any question of allowability as well as genuineness. There is no such cogent material on record to uphold the Assessing Officer’s conclusion therefore. - Decided in favour of assessee
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