TMI Blog2016 (8) TMI 1593X X X X Extracts X X X X X X X X Extracts X X X X ..... k control India Pvt. Ltd. [ 2009 (5) TMI 16 - SUPREME COURT] wherein observed that the valve actuators manufactured by the assessee, were sophisticated goods and statistical data indicated that every year some of these were found defective; that valve actuators being a sophisticated items, no customer was prepared to buy a valve actuator without a warranty. Therefore the warranty became an integral part of the sale price; in words the warranty was attached to the sale price of the product. In this case the warranty provision had to be recognized because the assessee had a present obligation as a result of past event resulting in outflow of resources and reliable estimate could be made of the amount of obligation. As assessee had incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness of trading and servicing of medical equipments. Assessing Officer on perusal of Annexure F to tax audit report observed that assessee had debited an amount of Rs.1,66,07,319/ in P L account as provisions of warranty. He noted that when warranty claimed by customers then assessee became liable to incur such expenses and if not there was no liability on assessee. Accounts were maintained on mercantile basis on the presumption of going concern. However, it was uncertain whether the same shall be claimed by customers in future. It was held that assessee had not provided substantiating evidence or basis for working of provision. In view of fact that warranty provided by assessee was not claimed by all these parties, being covered only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) observed that assessee s case is squarely covered by the decision of M/s. Rotork control India Pvt. Ltd. vs. CIT [2009] 314 ITR 62 (SC), wherein it was observed that the valve actuators manufactured by the assessee, were sophisticated goods and statistical data indicated that every year some of these were found defective; that valve actuators being a sophisticated items, no customer was prepared to buy a valve actuator without a warranty. Therefore the warranty became an integral part of the sale price; in words the warranty was attached to the sale price of the product. In this case the warranty provision had to be recognized because the assessee had a present obligation as a result of past event resulting in outflow of resources and rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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