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TMI Blog2023 (6) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... f provision for warranty created in excess of 2.14% of the sales. 3. The brief facts of the case are as follows: Assessee is a private limited company engaged in the business of distribution of Apple products in India. For the Assessment Year 2016-17, the return of income was filed on 30.11.2016 declaring a total income of Rs. 458,93,41,170/-. Assessment was completed under section 143(3) vide order dated 22.12.2018. The AO, in the said order, made a disallowance of provision for warranty created in excess of 2.14% of sales. The AO relied on the order of the Tribunal in assessee's own case for Assessment Years 2013-14 and 2014-15 in restricting the provision for warranty to 2.14% of the sales. 4. Aggrieved, the assessee filed appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad held that the warranty estimated at 2.14% was arrived based on assessee's past experience in the Indian International market and the post sales support rendered based on the technical evaluation. 10. In Rotork Case, it is held that a provision is a liability, which can be measured only by using a substantial degree of estimation and it is recognized when: a) an enterprise has a present obligation as a result of past event; b) it is probable and an outflow of resources will be required to settle the obligation., and c) A reliable estimate can be made of the amount of obligation. 11. It was argued by Shri, Percy Pardiwala that Assessment Order in this case is based on DkP's direction for A.Y. 2011-12 and contended that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;17,596 2,15,62,64,681 3,49,52,62,741 63,65,833,26,177 4.45 4.85 2016-17 3,49,52,62,741 3,13,33,88,99S 3,63,16,42,487 4,99,72,09,249 98,49,30,90,748 5.21 5.7 2017-18 4,99,72,09;249 3,80,34,30,000 4,37,57,10,300 4,42,54,79,249 1,14,03,23,80,000 3.34 4.44 Total 1874,32,16,533/- 1434,15,87,857 38886,41,85,286 Total provision for AYs 2007-08 to 2016-17 = Rs. 1493,97,36,553/- Total utilization for AYs 2008-09 to 2017-18 = Rs. 1426,07,56,990/- (95.5% of total provision for AYs 2007-08 to 2016-17) ** percentage of actual expenses over sales is the comparison of the utilization in the subsequent year towards the sales in the previous year Adverting to the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal utilization for the corresponding A.Y.:4 2008-09 to 2017-18 is 95.5% of the total provision. Therefore, as held in Rotork Case, the estimate made by assessee is reliable and robust. 16. In view of the above, the orders passed by the AO and confirmed by CIT(A) and the Tribunal are unsustainable in law and these appeals by the assessee merit consideration. 17. So far as the connected appeal 9 by Revenue is concerned, we may record that it is not in dispute that assessee has utilized 95.5% of the total provision for A.Y. 2007-08 to 2016-17. The percentage of utilization depends upon the warranty claims made during the corresponding year. The tabular column submitted by assessee shows that the warranty claim is varied between 2.16% to 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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