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2020 (2) TMI 833 - AT - Income TaxRevision u/s 263 - provision towards warranty was wrongly allowed by the AO - provision for warranty allowed based on past figures of claims against provisions made and hence said claim of provision towards warranty was wrongly allowed by the AO - HELD THAT:- We find the method adopted for making claim for provision for warranties as fair and reasonable and in our considered view the AO did formed an proper opinion after making due enquiries and verification while allowing claim of deduction of provisions for warranties for the impugned ay while framing scrutiny assessment , as also it is observed that it was a recurring issue for AO which is arising every year after year as it framed scrutiny assessment against assessee for preceding ay’s also for ay: 2010-11 to 2012-13 and in those years also the assessee made claim for deduction towards provision for warranties which was allowed by the AO in scrutiny assessment and Revenue finally accepted those orders so far as claim for deduction towards provision for warranties is concerned and it could not be shown that these orders for ay: 2010-11 to 2012-13 were interfered by Revenue by invoking provisions of Section 147 or Section 263 or any other provisions of the 1961 Act. It is settled proposition now that claim for deduction towards provisions for warranties made on the basis of past experience based on statistical data by adopting scientific method to fulfill contractual obligation arising out of concluded contracts of sale/services is an ascertained liability . Reference is drawn to decision of Hon’ble Supreme Court in the case of Rotork Controls India Private Limited v. CIT [2009 (5) TMI 16 - SUPREME COURT] . Under these circumstances based on totality of facts and circumstances of the instant case before us, we are inclined to quash the revisionary order dated 30.03.2019 passed by learned PCIT u/s.263 of the Act and hold that the assessment order dated 27.02.2017 passed by AO was not erroneous in so far as prejudicial to the interest of Revenue. We order accordingly.
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