2006 (4) TMI 457

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..... 1. The assessee is engaged in the manufacture and sale of TV and audio system. As a matter of policy, it offers warranty of one year on all the products which it has manufactured and sold. In order to provide for claims arising out of such warranties, the assessee set apart different amounts for different assessment years which it claimed towards deduction. The Assessing Officer, however, disall .....

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..... f this Court in CIT v. Vinitec Corpn. (P.) Ltd. [2005] 278 ITR 337 1. This Court has relied upon the decision of the Supreme Court in Bharat Earth Movers v. CIT [2000] 245 ITR 428 and IRC v. Mitsubishi Motors New Zealand Ltd. [1996] 222 ITR 697 (PC) held that the liability arising out of a warranty is an allowable deduction even when the amount payable by the assessee is quantified and discharged .....

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..... d to be accepted principles of commercial practice and accountancy." (p. 343) 3. In the instant case also, the assessee has on the basis of the past experience and the extent of claims made against it, set apart different amounts for different assessment years. It is not the case of the revenue that the amounts set apart were unreasonably disproportionate to the amounts which were claimed by the .....

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