TMI Blog2013 (4) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the product. It was also observed that warranty provisions have to be recognized because an assessee had a present obligation as a result of past events resulting in an outflow of resources and a reliable estimate could be made of the amount of obligation. Therefore the assessee had incurred the liability which was an allowable deduction under section 37 - assessee's appeal stands allowed. - I. T. A. No. 2353/Mum/2011 - - - Dated:- 13-2-2013 - Shri Dinesh Kumar Agarwal, JM And Shri Sanjay Arora, AM,JJ. For the Appellant : Shri Devdatta Mainkar For the Respondent : Shri Mohit Jain ORDER Per Dinesh Kumar Agarwal, JM :- This appeal preferred by the assessee is directed against the order dtd. 25-1-2011 passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition made by the A.O. 3. Being aggrieved by the order of the ld. CIT(A) the assessee is in appeal before us taking following grounds of appeal:- "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming disallowance of provision for warranty of Rs. 21,94,000/- without appreciating the fact that is ascertained liability of the Appellant. 2. Without prejudice to the contention in ground no. 1 above, the learned CIT(A) erred in not allowing deduction of Rs. 16,19,320/- of warranty claims accepted during the year under consideration." 4. At the time of hearing the ld. counsel for the assessee at the outset submits that the issue stands covered in favour of the assessee by the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efully. The assessee who is a manufacturer of automotive components had been issuing warranty at the sale of the product for removal of defects over a particular period of time. The assessee had made provisions for warranty expenditure in the year of sale on the basis of past experience etc. The issue is whether such provision for warrantee can be allowed as deduction. We find that the same issue had been considered by the Hon'ble Supreme Court in case of Rotork Controls India (p) Ltd. (supra) in which the Hon'ble Supreme Court observed that warranty was an integral part of sale price as the warranty stood attached to the sale price of the product. It was also observed that warranty provisions have to be recognized because an assessee had a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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