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2023 (9) TMI 748 - ITAT DELHIAd-hoc disallowance of power and fuel expenses - As per AO documents submitted by the assessee could not satisfactorily lead to co-relation between production and increasing power and fuel expenses - HELD THAT:- It is found that the assessee accepted the proposed addition made by the A.O. during the assessment proceedings and consequent to which addition made by the A.O. and now he cannot find fault with the Authorities in making addition. It was not demonstrated before us that the Assessee's Representative had agreed the said addition before the A.O. by mistake of fact or law or it was agreed before the A.O. without the authority from the assessee himself. Being so, agreed addition cannot be challenged before us. Therefore, we find no merit in the Ground Disallowance of Warranty expenses - DR submitted sales has decreased in comparison to the preceding years but the total warranty expenses have increased more than 250% and the provision for warranty expenses around 300% similarly in the Assessment Year 2005-06 as well, though the sales remained almost static, but the warranty expenses increased more than 200% - HELD THAT:- The provision of warranty has been made in very arbitrary manner as the assessee is not following consistent method of making provision for warranty. We are aware of the judgment of Rotork Controls [2009 (5) TMI 16 - SUPREME COURT] wherein it is held that if the warranty is based on the past experience i.e. historic trends, the estimate can be said to be reliable. When the assessee makes provision for warranty following scientific method and the same is not arbitrarily made, the reliable estimation made by the assessee to be allowed as deduction. In the present case, the assessee made provisions for warranty in arbitrary manner which is not supported by any scientific method which cannot be allowed as deduction, accordingly, we find no error in the order of the Lower Authorities. Thus, we confirm the addition made by the authorities and dismissing the Ground of the assessee.
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