Itxa/111/2012 Of The Commissioner Of Income Tax V Pune v. Atlas Copco (India) Ltd

sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.111 OF 2012 The Commissioner of Income Tax-V, Pune ..Appellant. V/s. Altas Copco (India) Ltd. ..Respondent. None for the appellant. Mr.P.J.Pardiwala, senior Advocate with Atul K.Jasani for the respondent. CORAM : J.P. DEVADHAR AND M.S. SANKLECHA, JJ. DATED : 1ST FEBRUARY, 2013 P.C. :- 1.This matter was mentioned yesterday by Mr.N.N. Singh, counsel for the revenue. At his specific request, this matter is placed on board today along with Income Tax Appeal No.1107 of 2012. The matter is first on Board along with income Tax Appeal No.1107 of 2012. The learned counsel Mr. N.N. Singh is not present. However, as the matter has been specifically kept for today, we proceed to hear the matter in the absence of the counsel for the revenue. We have heard Mr.Tejveer Singh, counsel for the revenue in the compnion appeal No.1107 of 2012. 2.In the present appeal by the revenue for the assessment year 1996-97, the following questions of law have been raised for our consideration:- a)Whether on the facts and in the circumstances of the case, the ITAT was justified in estimating the warranty claims @ 0.4% of the net sales by ignoring the concurrent finding of the fact that the A.O. and the CIT(A) that the assessee had no basis for estimating the claim @ 0.5% and no evidences in support that the expenditure was actuall incurred by it ?ITAT was justified in estimating the warranty claims @ 0.4% of the net sales by ignoring the concurrent finding of the fact that the A.O. and the CIT(A) that the assessee had no basis for estimating the claim @ 0.5% and no evidences in support that the expenditure was actuall incurred by it ? (b)Whether on the facts and in the circumstances of the case, the ITAT was justified in not applying the ratio of Supreme Court in the case of Rotork Controls India (P) Ltd. V/s. CIT reported in 223 CT 425 as the assessee has failed to make reliable estimate of the liability as mandated by the Apex Court in supra ? ITAT was justified in not applying the ratio of Supreme Court in the case of Rotork Controls India (P) Ltd. V/s. CIT reported in 223 CT 425 as the assessee has failed to make reliable estimate of the liability as mandated by the Apex Court in supra ? 3.The dispute in the present case is whether the provisions for warranty claim should be restricted to 0.1% as allowed by the assessing officer and upheld CIT(A) or 0.4% as held by the Tribunal as against 0.5% as claimed by the respondent-assessee. The assessing officer allowed the provisions for warranty claim at 0.1% of the sales made for the year. This was on the basis of an estimate as no particulars were furnished by the respondent-assessee. 4.The CIT(A) upheld the order of the assessing officer and held that only 0.1% of its sales can be considered as a reasonable provision for the warranty claims. 5.In appeal, the Tribunal by the impugned order has allowed the provision of warranty claim at 0.4% of the sales. This was allowed on the basis that during the subsequent year i.e. AY 2002-03 to 2005-06 it was found that provision made in those years were lesser than the actual expenditure incurred on warranties for those years. The Tribunal was conscious of the fact that the data for the subsequent years may not be relevant, yet in the absence of any other data, the same was used as a measure. Thus, the Tribunal concluded that the a reasonable estimate to make for provision for warranty would be 0.4% of the net sales and not 0.1% arrived at by the assessing officer as the same would be on lower side and unreasonable. We find that the assessing officer and the CIT(A) allowed the provisions of warranty at 0.1% without any basis while the Tribunal has allowed the provision of warranty at 0.4% based on figures submitted for the subsequent year. In view of the above, we find that in the circumstances, theitxal- 1425-12 provision for warranty of 0.4% is reliable and reasonable estimate. Thus, questions (a) & (b) are not being entertained. 6.In view of the above, we see no reason to entertain the appeal. Accordingly, the appeal is dismissed with no order as to costs. (M.S. SANKLECHA, J.) (J.P. DEVADHAR, J.)