TMI Blog2019 (10) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to make the payment in principle and the quantification is also not found erroneous and unscientific by the authorities. It was also observed by the Tribunal that unutilized provision is carried forward to the subsequent years by maintaining the opening and closing balances. Without bringing any evidence on record, the allegation of the Assessing Officer and the CIT(A) that the warranty expenses are not claimable was held to be incorrect. The assessee has maintained this method in principle over the years and they are not disturbed conclusively and hence, these provisions were allowed as claimed by the assessee Administrative Service Charges allowability - HELD THAT:- Admittedly, the issue arising before us is identical to the issue before the Tribunal in Tata Johnson Controls Automotive Ltd. Vs. DCIT [ 2016 (4) TMI 963 - ITAT PUNE] and following the same parity of reasoning, we hold that the said expenditure is to be allowed in entirety in the hands of assessee being paid in accordance with the terms of the Agreement agreed upon between the parties and for the purpose of carrying on the business of assessee more efficiently. It may be pointed out herein that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue has held and observed as follows: 12. Referring to Ground No.4, the Ld. Counsel submitted that this ground relates to the allowability of deduction in respect of the educational cess paid by the assessee. The Ld. Counsel further submitted that this issue is covered in nature by virtue of the decision of the Hon ble High Court of Judicature for Rajasthan Bench at Jaipur in the case of Chambal Fertilisers and Chemicals Ltd. Vs. JCIT, Range -2, Kota. 13. On hearing both the parties on this issue, we find that this issue is covered one by the decision of the Hon ble High Court of Judicature for Rajasthan Bench at Jaipur in the case of Chambal Fertilisers and Chemicals Ltd. Vs. JCIT, Range -2, Kota wherein substantial question of law No.3 is relevant in this regard (Para 3) and the same was adjudicated by the Hon ble High Court at Para 12 of the judgment. The Hon ble High Court on this issue held the said question No.3 is answered in favour of the assessee. For the sake of completeness, the said Paragraph is extracted as under: 12. We have heard consel for the parties. On the third issue in appeal no.52/2018, in view of the circular of CBDT where wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the allowability of deduction regarding Education Cess paid by the assessee. Thus, additional grounds raised by the assessee are allowed. B. Adjudication of the ground in appeal Memo- disallowance of provision for warranty : 8. The Ld. Sr. Counsel for the assessee referring to the ground in appeal memo in respect of disallowance of warranty provision, invited our attention at page 695 of the paper book filed before us and referred to the decision of the assessee s own case by the Pune Bench of the Tribunal in ITA No.1416/PUN/2016 for the assessment year 2011-12 decided on 01.03.2019 wherein the ground No.1 in the appeal of the assessee, the same question arose regarding the disallowance of provision for warranty on the basis that the provision of warranty has not been created by following a scientific method. This issue is exactly the same issue in all the appeals of the assessee filed before us. In that case of the assessee, the Tribunal on the issue has held as follows: 8. We heard both the parties on the issue of allowability of provisions of warranty and perused the orders of the Revenue on one side and the paper book placed before us along with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted in Future 2,45,16,733 Annexure-5 (Subtotal) 4,18,46,788 Refer page no.30 to 61 Warranty Provision as per P L 3,96,03,899 9. From the above, it is evident that the warranty is claimable by the consumers for which the conditions are specified. Therefore, in our view, the assessee has policy for payments towards the warranty expenses. Therefore, in principle, we do not agree with the findings of the CIT(A), who held that deduction for warranty is not allowable. 10. Regarding the quantum also, we find that, by the end of this year, the assessee created provisions to the tune of ₹ 97.5 crores out of which near about ₹ 81.72 croes was already incurred by the assessee. The contents of para 64 of the paper book with the data till financial year 2011-12 are extracted hereinbelow :- Details of provision for warranty and actual warranty claims Value in Rs. Particulars FY 2008-09 FY 2009-10 FY 2010-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee does not have a policy and the contractual obligation to make the payment in principle and the quantification is also not found erroneous and unscientific by the authorities. It is also seen that unutilized provision is carried forward to the subsequent years by maintaining the opening and closing balances. Therefore, without bringing any evidence on record, the allegation of the Assessing Officer and the CIT(A) that the warranty expenses are not claimable is incorrect. We also find the assessee has been maintained this method in principle over the years and they are not disturbed conclusively. Therefore, we hold that the provisions created by the assessee are required to be allowed as claimed by the assessee. Accordingly, the grounds raised by the assessee in this appeal are allowed. 9. The Ld. DR fairly conceded that the issue is covered in favour of the assessee. 10. We have perused the case records and heard the rival contentions. We have also considered the judicial pronouncements placed before us on record. Both the parties agreed that the facts and circumstances are absolutely similar with regard to the case filed before us. That as a matter of fact, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the same is excessive and unreasonable having regard to services rendered by TACO and the legitimate business needs of the appellant. The facts relates to the issue that the assessee therein had claimed an expenditure of ₹ 2,00,84,162/- on account of payment made to Tata Autocomp Systems Ltd (in short TACO ) on account of Administrate Support Services taken. That on this issue, the Tribunal has held as follows: 32. Now, coming to the case of quantum of remuneration to be allowed in the hands of assessee, where the CIT(A) has allowed expenditure @ 25% of total expenses and no basis has been given by the CIT(A) to allow the said expenditure @ 25% of the total. There is no basis for measuring such services and in the absence of any evidence brought on record to establish that the expenditure incurred by the assessee was excessive i.e. more than market value of the said services, we find no merit in the orders of authorities below in invoking provisions of section 40A(2)(a) of the Act. Accordingly, we modify the order of CIT(A) and direct the Assessing Officer to allow the expenditure in totality in the hands of the assessee as the said expenditure has been laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities below in this regard and accordingly, we modify the order of CIT(A) and direct the Assessing Officer to allow the expenditure in entirety in the hands of assessee. It may be pointed out herein only that the issue vide grounds of appeal No.1 and 2 raised by the assessee in assessment year 2006-07 and grounds of appeal No.1 and 2 raised by the Revenue are similarly raised by both the parties in assessment years 2007-08 to 2009-10. Accordingly, we allow the claim of assessee vis- -vis the said expenditure in all the years i.e. assessment years 2006-07 to 2009-10. The grounds of appeal No.1 and 2 raised by the assessee in all the appeals are thus, allowed and the grounds of appeal No.1 and 2 raised by the Revenue in all the appeals is thus, dismissed. 13.2 The Ld. Sr. Counsel for the assessee further submitted that all through out on this issue, a constant view has been taken by the Pune Bench of the Tribunal in favour of the assessee. That even, the Hon ble Bombay High Court in the case of Pr. Commissioner of Income Tax Vs. M/s. Tata Toyo Radiator Pvt. Ltd. In ITA No.342 of 2017 and Ors have approved these payments and have given ruling in favour of the assessee. 14. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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