2023 (4) TMI 202 - HC - Income Tax

Provision of ‘obsolescence of inventory’ - Tribunal concluded that the assessee has made scientific calculation for making provision based on commercially acceptable methods and valuation of the cost to be in accordance with AS-2 issued by the ICAI being one of the standards recognised u/s 145(2) wherein the closing stock is to be value at lower of cost or not realizable value - HELD THAT:- Tribunal took note of the decision of CIT vs. Hotline Teletube & Components Ltd [2008 (8) TMI 6 - HIGH COURT DELHI] wherein the Court took note of the more or less identical factual circumstances and dismissed the appeal filed by the revenue on the ground of no substantial question of law arises for consideration as the Tribunal has returned the finding of fact. Tribunal having examined the factual position and rendered a decision, we are of the view that no substantial questions of law arises for consideration in so far as substantial questions of law as suggested by the revenue and accordingly the same are rejected.

Provision for warranty - Tribunal has examined the relevant clause in the terms and conditions and found that the warranty clause is in-built in the guarantee clause itself as the assessee, in the event of any defective supply within a period of 5-1/2 years has to replace the meters and in the event of the meters not getting replaced, the assessee has to pay twice the cost of meters.

Tribunal on facts concluded that the assessee had agreed for both warranty (i.e., replacement of defective meters) as well as the guarantee (paying twice the cost of meters if meters are not replaced). Thus, the learned Tribunal was convinced on facts that the clause in the terms and conditions has an in-built warranty clause.

No substantial question of law arises on the said issue as the Tribunal has decided in favour of the assessee by returning ‘finding of fact’.