TMI Blog2023 (8) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on settlement of warranty schemes in earlier years and was based on the scientific exercise of making provision for warranty clause for each and every vehicle sold on a regular basis year on year. We find that the issue is squarely covered in favour of the assessee by the decision of Rotork Controls India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] Therefore, no infirmity in the impugned order allowing the claim of provision for warranty expenses. Accordingly, grounds raised by the Revenue are dismissed. - Shri G.S. Pannu, President, And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Viral Shah For the Revenue : Smt Mahita Nair ORDER The present appeal has been filed by the Revenue challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court. 4. The learned CIT(A)'s order is contrary in law and on facts and deserves to be set aside. 5. The appellant prays that the order of the Ld.CIT(A) on the above grounds be set aside and that of the AO be restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary at the time of hearing. 3. The only dispute raised by the Revenue, in the present appeal, is against deletion of disallowance made on account of provision for warranty. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in the business of manufacturing and selling motorised two-wheeler vehicles. For the year under consideration, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision of Rs. 3,45,17,000 and added the same to the total income of the assessee. 5. The learned CIT(A), vide impugned order, following the decision of the coordinate bench of the Tribunal rendered in the case of the parent company of the assessee, i.e. Mahindra and Mahindra Ltd v/s DCIT: (2020) 217 Taxmann.com 578 (Mumbai ITAT) allowed the claim of provision for warranty expenses and deleted the addition made by the AO. The relevant findings of the learned CIT(A), vide impugned order, are reproduced as under:- Provision for warranty Expenses i. The Appellant has submitted that Warranty expenses are determined on basis of actual sales and warranty expenses of last 5 years. Details of computing provision for warranty was en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenses in the case of parent company of Appellant (Mahindra and Mahindra Ltd.) the Appellant is allowed the claim of Provision for warranty expenses to the tune of Rs. 3,45,17,000/-. The Action of AO in making the disallowance/addition of Rs. 3,45,17,000/- is deleted. Being aggrieved, the Revenue is in appeal before us. 6. We have considered the submissions of both sides and perused the material available on record. During the year, the assessee has shown provision for warranty of Rs. 3,58,26,919, and provision for free service coupons of Rs. (-)13,10,373. Accordingly, the assessee has shown long-term provisions of Rs. 3,45,17,000. As per the assessee, the provision for warranty is made on a scientific empirical basis and hence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y claimant customer, settles the claim of the dealer. While settling claims, the Appellant captures warranty vehicle chassis number. b) Based on claims settled, the total warranty cost incurred is worked out for vehicles which are still under warranty coverage during the year. c) Based on total actual cost as arrived above and no. of vehicles sold during the years, per vehicle cost is worked out. d) Based on the actual cost trend, the Appellant extrapolates warranty cost for unexpired period of warranty and provide for the same in books of accounts. 7. Accordingly, the assessee submitted that the provision was created after making extensive working on a scientific basis and the same is backed by historical trends essenti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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