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The Deputy Commissioner of Income-tax, Chennai Versus M/s. Ford India Pvt. Ltd.

2015 (6) TMI 1126 - ITAT CHENNAI

Disallowance made in respect of provision for warranty - Held that:- The issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee’s own case, no provision can be recognized. Liability is defined as a present obligation arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. A past event that leads to a present obligation is called as an obligating event. The obligati .....

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racts) the probability that an outflow will be required in settlement, is determined by considering the said obligations as a whole. - Addition made being 5% of the dealer concession and incentives - Held that:- When the assessee claimed expenditure, it should be established that the expenditure was incurred for wholly and exclusively for the purpose of business. The assessee has to produce necessary bill and vouchers. In the present case, the assessee has failed to furnish details. The Asse .....

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ricing adjustment as per the order of the TPO - Held that:- CIT(Appeals) remitted the issue back to the file of the AO with direction to give an opportunity the assessee to submit its explanation and decide the issue on merits towards upward adjustment of the value relating to transfer pricing. We do not find any infirmity in the finding of the CIT(A), since, the AO has not given adequate opportunity to the assessee to explain the revised estimate by the TPO. - ITA Nos. 2976 to 2979/Mds/2014 - D .....

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ether, heard together and disposed off by this common order for the sake of convenience. 2. The first common ground taken in these appeals is with regard to deletion of disallowance made by the Assessing Officer in respect of provision for warranty without examining the facts of the case. 3. Since facts are common in all these appeals, we consider the facts as narrated in assessment year 1998-99. The assessee claimed a sum of ₹ 3,15,93,392/- as product warranty expenses. The assessee state .....

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incurred. The estimates for accounting of the warranty are reviewed every month and reports are made as required with regard to actual amount of warranty expenses. Hence, the amount ultimately charged to the P & L account is the actual cost incurred by the assessee on the warranty given on the car. The assessee has also relied on the decision of the Delhi High Court in CIT vs. Vinitec Corporation Pvt. Ltd.(278 ITR 337). The assessee s explanation is not acceptable as the assessee himself ha .....

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so the order of the Tribunal, Madras in assessee s own case in ITA No.395/Mds/2009 dated 7.5.2010 for the assessment year 1999-2000. Against this, the Revenue is in appeal before us. 5. We have heard both the sides and perused the material on record. As observed by the CIT (A), the issue is squarely covered in favour of the assessee by the decision of the Tribunal in assessee s own case, wherein the Tribunal considered the issue and observed as under 4: 4. At the time of hearing, it was brought .....

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reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision can be recognized. Liability is defined as a present obligation arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. A past event that leads to a present obligation is called as an obligating event. The obligating event is an event that creates an obligation which results in an outflow of resour .....

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by considering the said obligations as a whole. Respectfully following the aforesaid decision of the Tribunal, we are inclined to dismiss this ground of appeal in all these appeals. 6. The next ground in ITA No.2977/Mds/14 for the assessment year 2001-02 is that the CIT(Appeals) erred in law in holding that the reassessment proceedings are invalid, if the issue on which the addition made was not the part of reopening and the issue on which the assessment reopened, no addition was made. Since, we .....

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iture towards dealer concession and incentive as the assessee has not produced any details. However, the CIT(Appeals) deleted the addition by observing that no ad-hoc disallowance is possible. 8. We have heard both the sides and perused the material on record. When the assessee claimed expenditure, it should be established that the expenditure was incurred for wholly and exclusively for the purpose of business. The assessee has to produce necessary bill and vouchers. In the present case, the ass .....

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oses. 9. The next ground in the aforesaid appeal is that the CIT(Appeals) erred in directing the AO to allow the assessee an opportunity to submit their explanation and decide the issue on merit in respect of addition of ₹ 44,66,883/- made on account of transfer pricing adjustment as per the order of the TPO. 10. The facts of the case are that the AO has not given reasonable opportunity to be heard to the assessee on the upward adjustment of the TPO to the extent of ₹ 44,66,883. In t .....

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as determined that the total income of the assessee requires an upward adjustments to the extent of ₹ 44,66,883. In view of this, a show cause letter was issued on 20.12.2006 requiring the assessee as to why this total income should not be upwardly adjusted by ₹ 44,66,883. The case was posted for hearing to 26.12.2006 at 2p.m. No one appeared for the hearing. When the Inspector of Income-tax, contacted the assessee's office, it was informed that the whole company is closed for ho .....

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closed. On further pursuation the Manager (Taxation) (Indirect Tax) contacted me over phone. It was informed by him that the Manager Taxation of (Direct Taxes) was away in Vizag. Shri Mahendra Kumar again contacted me over phone from Vizag only to inform that no reply was filed for the show cause notice issued on 20.12.2006. At the same time it was told that the assessee's representative Ms G.A. Lakshmi was also on leave. In the circumstances I have to treat that the assessee has not respon .....

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