The Income Tax Officer, Ward 5(1), Baroda v. Kevin Enterprise....opponent(S

O/TAXAP/968/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 968 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI andHONOURABLE MR.JUSTICE K.J.THAKER ==================================== 1Whether Reporters of Local Papers may be allowed to see the judgment?2To be referred to the Reporter or not?3Whether their Lordships wish to see the fair copy of the judgment?4Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder?5Whether it is to be circulated to the civil judge? ====================================THE INCOME TAX OFFICER, WARD 5(1), BARODA....Appellant(s) Versus KEVIN ENTERPRISE....Opponent(s) ==================================== Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1==================================== CORAM: HONOURABLE MR.JUSTICE KS JHAVERIand HONOURABLE MR.JUSTICE K.J.THAKER 1. 2. Date : 19/12/2014 ORAL JUDGMENT(PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal, the department has challenged the judgment and order of the Tribunal, whereby, the Tribunal has dismissed the appeal preferred by the department confirming the order of the CIT (Appeals). While admitting the matter, this Court has framed following substantial question of law: “Whether the ITAT was right in law and on facts in deleting the addition of Rs.5,95,802/- made under the head provision made on account of warranty which is in the nature of contingent liability?” This appeal was initially ordered to be heard with Tax Appeal No. 966 of 2007. However, the said appeal i.e. Tax Appeal No. 966 of 2007 and other matters came to be dismissed by this Court by way of judgment and order dated 26/11/2014 answering the identical question raised in the present appeal, in favour of the assessee and against the department. For ready perusal, relevant paragraph Nos. 8 and 9 of the said decision are extracted hereunder: “8.We have heard learned counsel for both the sides and perused the record of the case. The issue involved in these appeals is already concluded by a judgment of the Apex Court in the case of Rotork Controls India Pvt. Ltd. v. Commissioner of Income Tax, [2009] 314 ITR 62 (SC). In that case, the assessee was engaged in the business of manufacture of valve actuators, which were sophisticated goods. The statistical data indicated that every year some of these were found defective. The valve actuator, being a sophisticated item, no customer was prepared to buy it without a warranty. Therefore, the warranty became an integral part of the sale price. In other words, the warranty stood attached to the sale price of the product. It was held that warranty provisions had to be recognized because the assessee therein had a present obligation as a result of past events resulting in an outflow of resources and a reliable estimate could be made of the amount of the obligation. Therefore, the assessee therein had incurred a liability during the assessment year which was entitled to deduction u/s.37 of the Income-tax Act, 1961. 9.Learned counsel appearing for the Revenue was not in a position to dispute the above proposition of law. Since the issue is already concluded as aforesaid, we are not assigning elaborate reasons while disposing of the present appeals and accordingly, answer the question raised in these appeals in favour of the assessee and against the Revenue.” 3.There is no dispute amongst both the learned counsels that the aforesaid decision will apply in the facts of this case also, as the 9.Learned counsel appearing for the Revenue was not in a position to dispute the above proposition of law. Since the issue is already concluded as aforesaid, we are not assigning elaborate reasons while disposing of the present appeals and accordingly, answer the question raised in these appeals in favour of the assessee and against the Revenue.” 3.There is no dispute amongst both the learned counsels that the aforesaid decision will apply in the facts of this case also, as the facts and the question of law raised, are identical and therefore, we are not giving elaborate reasons. 4.Accordingly, the question, “Whether the ITAT was right in law and on facts in deleting the addition of Rs.5,95,802/- made under the head provision made on account of warranty which is in the nature of contingent liability?” is answered in favour of the assessee and against the department. The appeal stands dismissed accordingly. [ K. S. Jhaveri, J. ] hiren [ K. J. Thaker, J. ]