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2018 (9) TMI 1319 - HC - Income TaxClaim of expenditure as provision for warranty - whether provision was made on a scientific basis on the basis of actual warranty cost incurred in the year and the outstanding warranty risk and not an adhoc estimate? - Held that:- Assessee filed a paper book containing the movement in provision for warranty and note on allowability of provision for warranty with annexures, which were placed before the Assessing Officer, CIT(A) as well as the Tribunal. The relevant details, which are contained in the movement in provision for warranty were culled out in the form of a separate sheet from which, we find that the exposure to warranty risk has been done on a scientific basis. The assessee has been able to produce the details from the year 2001 onwards. Thus, the CIT(A) was perfectly correct in coming to the conclusion that the Assessee has explained the basis for working of the provision for warranty based on past experience and it is not on adhoc basis and moreover, it is based on the turnover of the last three years and based on provision for expenses on repairs during the warranty period as contemplated in the sale agreements. We are of the considered view that the Tribunal has erroneously reversed the order passed by the CIT(A) that too without assigning any reasons and without considering the materials, which are available on record. - Decided in favour of assessee.
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