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2018 (4) TMI 1979 - AT - Income TaxDisallowance of warranty provision - assessee could not explain to scientific basis on which the warranty provision was paid - assessee explained that the assessee gives post sales warranty against the performance of its product and manufacturing defects therein and this can be observed in the terms of delivery and payment mentioned in the sample copies of the order confirmation document - HELD THAT:- This provision for warranty is estimated by the assessee on scientific basis and assessee has claimed net of provision utilized during the year as per reversal method of accounting and hence we find no infirmity in the claim of the assessee. Accordingly, we reverse the orders of the lower authorities and allow the claim of the assessee. This issue of assessee’s appeal is allowed. Nature of gain - Gain arising on land building as a separate long term capital gain and short term capital gain - HELD THAT:- We find that the CIT(A) has rightly treated the sale consideration arising out of land as long term capital gain and sale consideration attributable to building as short term capital gain. Hence, we find no infirmity in the order of CIT(A) and hence the same is confirmed. The issue of Revenue’s appeal is dismissed.
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