TMI Blog2020 (9) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... s are squarely covered in favour of the assessee by the various decisions of the Tribunal passed in assessee s own case for the earlier years [ 2018 (9) TMI 1990 - ITAT PUNE] and respectfully following the same, we uphold the impugned order of ld. CIT(Appeals) allowing the claim of the assessee for deductions on account of provision for warranty and provision for after sales cost. - Decided against revenue. - ITA No. 1621/PUN/2017 - - - Dated:- 2-9-2020 - SHRI P. M. JAGTAP, VICE PRESIDENT (KZ) AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER Assessee by : Shri Ronak Desai. Revenue by : Shri Aseem Sharma. ORDER PER P. M. JAGTAP , VICE PRESIDENT This appeal is preferred by the Revenue against the order of ld. CIT(Appeals) 4, Pune dt.06.03.2017. 2. In the first ground, the Revenue has challenged the action of ld. CIT(Appeals) in deleting the disallowance of ₹ 4,36,66,315/- made by the Assessing Officer on account of SAP implementation charges. 3. The assessee in the present case is a company which is engaged in the business of manufacturing of Hi-tech Equipments. The return of income for the year under consideration was filed by it on 30.11.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture was not incurred by the appellant on once and for all basis but for maintaining and preserving the assets of the company on continuous basis for its effective and efficient day-to-day working. The appellant reiterated that such expenditure was necessary for the efficient functioning of the assets of the company and hence was in the nature of revenue expenditure. The appellant finally stated that under such condition, expenditure on SAP implementation was wrongly treated by the AO as capital expenditure and should be allowed as revenue expenditure. The appellant also relied on the decision cited before the AO and further the decision of the Special Bench of Delhi Tribunal in the case of Amway India Enterprises v. DCIT (114 TTJ 476)(Del.) (SB). The appellant also relied on the decision of the Delhi Tribunal in the case of M/s. Indo Rama Synthesis Ltd. Vs ACIT (ITA No. 2002/Del.2008) (TDel.) in support of its claim. 5.3.2 I find that the AO in a stretched misinterpretation of the decisions cited before him had disallowed the appellant's claim of revenue expenditure on account of SAP implementation of RsA,36,66,315/-. In fact, all the decisions cited by the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co., Ltd. 226 Taxman 135 wherein in the context of installation of software programme, the Court inter alia has observed as under : 12 . The assessee in such cases installs the computers. This technology is now said to be acceptable in changing world. The rapid advancement of research also contributes a small degree of endurability, but that by itself does not mean that the expenses incurred cannot be revenue in nature. Since technology advancement is an aspect which must be taken judicial note of, so also, machinery becoming obsolete that there is necessity of acquiring further technology. This is to meet the growing competition and considering trends in the market. Therefore, such expenditure will have to be treated as revenue expenditure. 13. Therefore, in view of the Court taking note of rapid technological development, purchase of technology may not lead to any enduring benefit as the same may have to be upgraded very soon. In any case, the finding of fact in this case is that there is no purchase of technology by the respondent assessee. 5. Respectfully following the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs. M/s. KSB Pumps ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that the said provisions were not made on scientific basis and the same being made for unascertained liabilities represented contingent liabilities which were not allowable as deduction under the Income Tax Act. On appeal, the ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer on these issues and allowed the claim of the assessee for deductions on account of provision for warranty and provision for after sales cost by following the decision of the Tribunal rendered in assessee s own case for the earlier years consistently allowing the claim of the assessee for similar deductions. 11. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that a similar issue had come up for consideration before the Tribunal in the earlier years and the same was consistently decided by the Tribunal in favour of the assessee as discussed in detail year-wise and narrated by the Tribunal in its latest order dt.25.08.2019 passed for A.Y. 2010-11 in ITA No.722/PUN/2016 in Para No.8 as under : 8. We have heard both the parties on this limited issue of allowability of provision of warranty and After Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 method and calculated properly, the provision made for warranty in respect of goods should be allowed u/s. 37 (1) of the Act. Therefore, we are of the opinion that the order of the CIT(A) is fair and reasonable and the same does not require any interference. Accordingly, grounds raised by the Revenue are dismissed. 12. The issues relating to assessee s claim for deduction on account of provision for warranty and provision for after sales cost thus are squarely covered in favour of the assessee by the various decisions of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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