TMI Blog2010 (1) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... y and not contingent in nature and, therefore, was allowable as deduction in computing profit and gains of the business – expenses allowed - 82/2010 - - - Dated:- 19-1-2010 - MR. BADAR DURREZ AHMED and MR.SIDDHARTH MRIDUL, JJ. Appellant through: Ms P.L. Bansal Respondent through: Mr Prakash Kumar JUDGEMENT : BADAR DURREZ AHMED CM 628/2010 (Exemption): Allowed subject to all just exceptions. The application stands disposed of. ITA 82/2010 1. The Revenue has filed this appeal in respect of the assessment year 2004-05 against the order dated 26th March, 2009 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') in ITA No. 1973/Del/2008. 2. The issue raised before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the immediate previous year i.e. of October, 2002 to March, 2003, since the claim of warranty in respect of the same were to be settled in the current year itself. 6. The Assessing Officer considered the submissions made by the assessee and took the view that the assessee was not entitled to claim warranty expenses on provision basis in respect of the prior period sales i.e., period from October, 2002 to March, 2003 and as such an amount of Rs 10,41,476/-, being the provision for warranty relating to that period, was disallowed under Section 37(1) of the said Act. It was further observed that warranty claims are contingent i.e., dependent upon the happening of an event in future, such as, a fault occurring in the goods and resultant clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales of the previous year. Consequently, the Tribunal reduced the provision of Rs 31,35,150/- by the sum of Rs 10,41,476/- pertaining to sales for the period from October, 2002 to 31st March, 2003. As such, the provision for warranty expenses during the year were to be reduced to Rs 20,93,674/- (Rs 31,35,150 - Rs 10,41,476/-). The figure of Rs 25,28,523/- mentioned in the impugned order is incorrect. However, the principle adopted by the Tribunal is correct, inasmuch as the sum of Rs 10,41,476/- is to be reduced from the provision for warranty expenses as claimed by the assessee. 9. The Tribunal also held that in view of the decision of this Court in the case of Commissioner of Income Tax v. Vinitec Corporation Pvt. Ltd.: 278 ITR 33 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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