TMI Blog2013 (2) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... hether provision for warranty is a contingent liability – Assessee claimed deduction – Held that:- As decided in Rotark Controls India P. Ltd. v. CIT reported in [2009 (5) TMI 16 - SUPREME COURT OF INDIA] makes it clear the historical trend is the question whether in the past there was any defect in the manufactured goods and not the actual expenditure incurred in rectifying the defect or in substituting the defective product with a defectless product – Assuming that the amount of warranty claiming deduction is actual and not incurred by the assessee, the difference in the amount is taxed in the subsequent year – warranty is not a contingent liability and the assessee is entitled to claim deduction – Decided against the revenue. - ITA NO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emaining amount of Rs. 23,19,065 was added. The assessee challenged the said finding before the appellate authority. The appellate authority held that the entire amount of Rs. 6,04,74,500 is allowable as deduction. Aggrieved by these two findings, the Revenue preferred an appeal to the Tribunal. In so far as treating the licence fee for a software as revenue expenditure, the Tribunal affirmed the said finding relying on the Special Bench decision of the Tribunal. In so far as the claim of warranty is concerned, though it was held it is not a contingent liability and the assessee is entitled to claim deduction, the Tribunal held before such claim is allowed, the authorities have to make sure that there is no double deduction and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outflow incurred by the assessee in pursuance of the warranty, the estimate cannot be made regarding the amount to be claimed as deduction under the heading of "warranty". In this case, as there is no such evidence, the assessee is not entitled to the said benefit. 5. The law laid down by the apex court makes it clear the historical trend referred to therein is to the question whether in the past there was any defect in the manufactured goods and not the actual expenditure incurred in rectifying the defect or in substituting the defective product with a defectless product. Assuming that the amount of warranty claiming deduction is actual and not incurred by the assessee, the difference in the amount is taxed in the subsequent year. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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