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TMI Blog2018 (9) TMI 1990X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Sales Cost. 2. For this and such other reasons as may be urged at the time of hearing, the order of Ld. CIT(A) may be vacated and that of the Assessing Officer be restored. 3. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal." From the above, it is evident that the issue raised before us for adjudication is whether the Provision of warranty and After Sales Cost constitute an allowable deduction or not. 3. Briefly stated relevant facts include that the assessee is engaged in the business of manufacture and sale of petroleum refining and distillation equipment and filed return of income on 09.10.2010 declaring total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC) 37 ITR 66, wherein it was held that expenditure, is, what is paid out or away and is something which is gone irretrievable. The assessee has not paid out the money but simply made the provision and debited it to P & L A/c., which cannot be termed as payment within the meaning to section 37 of the I.T.Act. Section 37 of the 1961 Act does not refer to "making of provision" it only refers to "deduction permissible on account of actual expenditure incurred". Further, the assessee has not given any scientific method of calculation to arrive at such liability. It is thus clear that the provision for warranty debited is contingent liability. The same is not allowable and amount of Rs. 1,53,30,352/- and Rs. 3,95,09,000/- added back to the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of provisions for warranty and provision for After Sales Cost, I am of the view that in sum and substances, they are one and the same. In this regard, I also place reliance on the judgment rendered by the Hon'ble ITAT "E" Bench, Mumbai in ITA Nos. 3677 & 8219/MUM/2004, wherein, it has been held that "5. We have considered the rival submission and perused the material available on record. We find that the contention of the Assessing Officer that the assessee company can debit the expenditure relating to the sales warranty directly to the P & L account is not acceptable when the assessee is estimating the warranty liabilityes on the basis of some scientific method and the same system is following since several years. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not furnished proper calculation and details of the expenditure incurred on account of said provisions i.e. provision of warranty and After Sales Cost. 7. On the other hand, the Ld. Counsel for the assessee described the manner in which the Assessing Officer made addition without considering the submissions of the assessee in right perspective. Relying heavily on the order of CIT(A), Ld. Counsel submitted that, on similar facts, the claim of the assessee was allowed in previous assessment years in assessee's own case. He cited the list of cases in which relief was granted by the Tribunal and the Hon'ble High Court relying heavily on the data tabulated in CIT(A)'s order in Para 4 ( Page-7). He also relied on the Apex Court judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... table extracted above, it is evident that the claim of the assessee in principle is allowed by the Hon'ble Jurisdictional High Court in assessee's own case in many assessment years i.e. 1998-99 to 2009-10. It is also evident from the above table that the Assessing Officer himself allowed claimed of the assessee in assessment year 2002-03 and 2009-10. In same assessment year, the Department accepted the said decision of the Tribunal and never filed appeal before the Hon'ble Bombay High Court. As such, decision of CIT (A) is, in principle, as per judgment laid down by the Hon'ble Apex Court in the case of Rotork Controls India Ltd. (supra.). It is a settled legal principle that in any case where estimation is done based on scientific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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