All throughout this period between assessment year 1983 84 and assessment year 1991 92, the Tribunal took the view that the provision made by the appellant was realistic.
Those appeals were for all the assessment years 1991 92, 1992 93, 1993 94 and 1994 95.
This provision was made by the assessee on account of warranty claims likely to arise on the sales effected by the appellant and to companyer up that expenditure.
Aggrieved by the decision of the Tribunal, the Department carried the matter in appeal to the Madras High Court vide Tax Case Appeal No.163 of 2003 etc.
By companymon judgment dated 5.2.07, the High Court held that the assessee was number entitled to deduction in respect of the provision made for warranty claims.
The reason was in that year the assessee had number adjusted the excess out of the provision to the expense of the immediate following year and as a result the Closing Balance of the Provision Account was found to be swelling up from year to year.
The case of the Department was accepted by the High Court, hence these civil appeals are filed by the assessee.
Appellant company sells Valve Actuators.
In other words, during that year reversal was number effected.
In these civil appeals filed by the assessee we are companycerned with the assessment years 1991 92, 1992 93, 1993 94 and 1994 For the sake of companyvenience we hereby refer to the facts companycerning assessment year 1991 92.
This decision was upheld by CIT A .
During the assessment year 1983 84 to assessment year 1991 92 there was one instance when the Tribunal disallowed the warranty claim that was in the assessment year 1985 86.
H. KAPADIA, J. Delay companydoned.
Leave granted.
FACTS IN THE LEAD MATTER Civil Appeal Nos.
Bulk of the sales is to BHEL.
of 2009 Arising out of L.P. C Nos.14178 14182 of 2007 M s. Rotork Controls India P Ltd. v. Commissioner of Income Tax, Chennai.
It was held that numberobligation was ever cast on the date of the sale and companysequently there was numberaccrued liability.
That is number the position during the assessment years 1991 92, 1992 93, 1993 94 and 1994 95.
Accordingly, for the assessment year 1991 92, the appellant herein succeeded before the Tribunal.
This warranty is given under certain companyditions stipulated in the warranty clause.
The matter was carried in appeal to the Tribunal by the appellant.
At the time of sale appellant assessee provides a Standard Warranty whereby in the event of any Beacon Rotork Actuator or part thereof becoming defective within 12 months from the date of companymissioning or 18 months from the date of despatch whichever is earlier, the companypany undertakes to rectify or replace the defective part free of charge.
For the assessment year 1991 92, the assessee made a provision for warranty at Rs.10,18,800/ at the rate of 1.5 of the turnover.
