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2022 (10) TMI 1059 - HC - Income TaxDisallowance of provision at the rate of 1% of the sale value of kitchen appliances, other than pressure cooker and cookware towards warranty - HELD THAT:- The warranty claims if any, will be received either in that year or subsequent years. CIT(A) has recorded the factual aspect that assessee had incurred warranty expenses of Rs.2.86 Crores for the claims during the financial years 2011- 12 and 2012-13. The warranty claims said to have been discharged for the subsequent years namely A.Y. 2013-14 to 2015-16 are also much higher and to be precise, Rs.4.96 Crores, Rs.7.89 Crores and Rs.3.85 Crores respectively. In para 27 of Rotork Controls, extracted hereinabove, it is held that when warranty costs are integral part of the sale price, then assessee has to provide for such warranty costs in its account for the relevant year, otherwise the matching concept fails. CIT(A) has passed a detailed order by recording the factual aspect of the case and considering the authorities on the point, where as, the ITAT has considered expenses incurred in incorrect A.Ys. Further, in our view, the ITAT has misconstrued the law laid down in Rotork. In view of undisputed facts that the exported products were pressure cookers and the kitchen ware and the claims received for the A.Y. in question, is in excess of the provision made, in our view, the provision has been made based on the past experience of the assessee in its business. These appeals merit consideration.
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