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TMI Blog2018 (9) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... l has been admitted by the order dated 24.07.2008 on the following substantial question of law : Whether on the facts and circumstances of the case, the Tribunal was right in disallowing the provisions made towards liability for warranty for goods supplied by the appellant on the ground that it is a contingent liability? 3. The Assessee is engaged in the business of software development. For the assessment year 2000-2001, the Assessee filed a return of income on 15-10-2001 admitting an income of Rs. 3,57,79,950/-. The return was processed under Section 143(1) of the Income Tax Act, 1961 (in short the Act ) on 20.01.2003 accepting the same. Subsequently, the return was selected for scrutiny under Section 143(2) of the Act and assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, it is submitted that the order passed by the CIT-A requires to be restored and the substantial question of law framed should be answered in favour of the Assessee. 6. Learned counsel appearing for the Revenue submitted that the decision of the Hon'ble Supreme Court in Rotork Controls India Private Limited V. CIT, (2009) 314 ITR 0062 (SC), lays down legal position as to when a warranty provision is allowed as a deduction. Referring to the decision of the Division Bench of this Court in the case of CIT V. Forbes Campbell Finance Limited, (2013) 352 ITR 602 (Mad), it is pointed out that unless three conditions recognising the liability, as pointed out in the said decision are satisfied, the claim could not be automatically allowed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the end of the previous year and therefore, the Assessee's claim is merely provisional in nature. 9. The CIT-A, while reversing the finding of the Assessing Officer, did not touch upon this aspect, but was largely influenced by the fact that the Assessing Officer did not fault the method of accounting followed by the Assessee. In our considered view, the CIT-A misdirected itself in not addressing the correct question, which required to be determined. The CIT-A ought to have examined the correctness of the findings of the Assessing Officer, taking note of the conduct of the Assessee that the provision made was not crystalised or ascertained at the end of the previous year and unless and until this finding was held to be non-substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived the provision at 17,15,000/-. On a perusal of this working, we find that there is absolutely no historical trend based on which, the Assessee has made such a deduction. In fact, everything appears only to be a provision and nothing has been substantiated and as rightly pointed out by the Assessing Officer, the Assessee has failed to crystalise the said provision at the end of the previous year. 12. Faced with this situation, learned counsel for the Assessee requested that the matter may be remanded to the Assessing Officer for fresh consideration so that the Assessee will be able to produce material to substantiate the case. We find that such a plea wholly inadmissible at this juncture, especially when we are called upon to decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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