TMI Blog2011 (7) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business of manufacturing of transformers and filed its return of income declaring total income of ₹ 4,36,53,976/-, which was processed u/s 143(3) of the determining income of ₹ 45,93,44,016/-. During the year, the assessee earned dividend income on investments in shares amounting to ₹ 61.44 lakhs and the interest expenditure debited and claimed amounted to ₹ 449.75 lacs. While completing the assessment, the AO had disallowed a sum of ₹ 7,74,000/- u/s 14A of the Act, rws 8D of the Act. On appeal, the CIT(A) confirmed the action of the AO. Aggrieved, the assessee is in appeal before the Tribunal. 4. At the time of hearing before us, the learned representatives of the parties agreed that the issue under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for warranty amounting to ₹ 60,50,000/- 8. The assessee had debited a sum of ₹ 60,50,000/- in the accounts for anticipated liabilities that may arise in future for the goods sold. On being asked to explain by the AO, the assessee had submitted that anticipated warranty claim had been debited to meet the claims that may arise. The amount had been quantified on the basis of past experience and the provision had been created. Following the decision in AY 2005-06, the AO disallowed the claim of the assessee. On appeal, the CIT(A) following the judgment of the Hon ble Supreme Court in the case of Rotork Controls India Ltd., 314 ITR 62 directed the AO to allow the claim of the assessee. Aggrieved, revenue is in appeal before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction claimed should be allowed. The ld. D.R submitted that the AO did not examine the question as to whether the estimate of liability by the assessee was proper and, therefore, the matter should be remanded for fresh consideration by the AO taking into consideration also the decision of the Hon ble Supreme Court in the case of Rotork Controls India Pvt. Ltd.(supra). 15. We have considered the rival submissions. The Hon ble Supreme Court in the case of Rotork Controls India Pvt. Ltd. Had an occasion to consider a case where a deduction on account of a provision for warranty expenses was made by the assessee and based on that provision deduction while computing income was claimed by the assessee. The revenue authorities disallowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee be allowed. Ground No.2 is accordingly allowed. 8. Since the issue is identical to that of AY 2005-06, we respectfully follow the decision of the Tribunal in that year and in the light of that we uphold the order of the CIT(A) in allowing the provision of warranty claim of the assessee amounting to ₹ 60,50,000/-. Accordingly, this ground of revenue is dismissed. 9. Ground No. 2 reads as under:- On the facts and in the circumstances of the case and law, the ld. CIT(A) erred in holding the capital expenditure as revenue expenses ignoring the fact that deposit given for a land on a lease was capital in nature. 10. The assessee had taken a factory land on lease for which premium was paid. The assessee had amortize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,59,67,649/- whereas the assessee followed exclusive method of accounting and followed AS-2 on valuation of inventories and the guidance note on accounting treatment for Modvat/Cenvat issued by the ICAI and accordingly the exclusive method for accounting has been followed. The assessee relied upon the decision of the ITAT, Mumbai in the case of Hawkins Cookers Ltd. V. ITO(ITA 505/Mum/04). Therefore, the CIT(A) directed the AO to delete the addition made u/s 145 of the Act. Aggrieved the revenue is in appeal before the Tribunal. 14. Before us, both the parties submitted that the issue is covered by the decision of the Tribunal in assessee s own case in AY 2005-06 (supra) wherein the Tribunal held as under:- 50. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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