TMI Blog2023 (6) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... K, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against order of CIT(A), dated 25.02.2020. The relevant Assessment Year is 2016-17. 2. The solitary issue that is raised is whether the CIT(A) is justified in confirming the disallowance of 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e records. 9. In assessee's own case in ITA No. 204/2008 (Commissioner of Income Tax Vs. M/s. Apple Computers International Pvt. Ltd), this court has answered the question of law in assessee's favour. In the said appeal, Revenue had challenged the Tribunal's order 6 which had 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,33,79,038 '3,21,46,251 2,18,97,22,707 3.77 5.96 2009-10 3,21,46,251 14,40,19,057 12,42,67,639 5,18,97,669 4,43,69,70.700 3.25 5.68 2010-11 5,18,97,669 17,75,89,409 12,78,97,272 10,15,89,306 4,56,52,93,882 3.89 2.88 2011-12 10,15,89,806 18,74,41,965 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. He is right in his submission that the total 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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