GREY ORANGE INDIA PRIVATE LIMITED,GURUGRAM vs. ACIT CIRCLE-10(2), NEW DELHI

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ITA 645/DEL/2023Status: DisposedITAT Delhi18 July 2025AY 2017-183 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal decided to restore the issue of disallowance of the provision for warranty expenses back to the Assessing Officer for fresh adjudication. The reasoning was based on the principle of judicial consistency. The Tribunal noted that for the preceding Assessment Year 2016-17, a similar issue concerning the assessee's warranty provisions had been restored to the Assessing Officer by the Tribunal's order dated 10.06.2024 in ITA No. 7607/Del/2019. This restoration was to allow the AO to verify all relevant facts in light of the Supreme Court's decision in Rotork Control India (P) Ltd. Vs. CIT. Therefore, applying the same logic and maintaining consistency, the Tribunal directed the Assessing Officer to re-adjudicate the instant issue for Assessment Year 2017-18 afresh, after verification as per law. The operative direction is to remand the issue to the Assessing Officer. No issue was expressly left undecided.

What were the facts?

The assessee, Grey Orange India Pvt. Ltd., is in appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench, against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi. The appeal pertains to Assessment Year 2017-18 and challenges proceedings under section 143(3) of the Income-tax Act, 1961. The core dispute involves the disallowance of a provision for warranty expenses amounting to Rs. 23,55,087. The Assessing Officer (AO) had disallowed this claim, citing the assessee's failure to provide historical data for the provision. This disallowance was based on the AO's reasoning in the preceding assessment year, 2016-17, which was also upheld by the CIT(A).

What were the issues?

1. Whether the Tribunal had to decide on the disallowance of the assessee's provision for warranty expenses amounting to Rs. 23,55,087 for Assessment Year 2017-18, and if so, on what grounds. Assessee's contention: The assessee's sole substantive grievance is against the disallowance of its provision for warranty expenses. The assessee's counsel informed the Tribunal that for the preceding Assessment Year 2016-17, the Tribunal's order in ITA No. 7607/Del/2019 (dated 10.06.2024) had restored the issue back to the Assessing Officer for fresh adjudication after verification of facts, in light of the Supreme Court decision in Rotork Control India (P) Ltd. Vs. CIT (2009) 314 ITR 62 (SC). Revenue's contention: The judgment records no specific contentions from the revenue. However, the Assessing Officer's basis for disallowance, as noted by the Tribunal, was the assessee's failure to prove the corresponding historical data of the impugned provision for warranty.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA & SHRI S. RIFAUR RAHMAN

For Appellant: Adv. Sh. Kashish Gupta, CA
Hearing: 26.06.2025Pronounced: 18.07.2025

Assessment Year: 2017-18 Vs. ACIT, Grey Orange India Pvt. Ltd., First Floor, Orient Bestech Circle-10(2), Business Tower, NH-8, New Delhi Sector-34, Gurgaon, Haryana PAN: AAFCG6416L (Appellant) (Respondent) Assessee by Sh. Vishal Kalra, Adv. Sh. Kashish Gupta, CA Department by Sh. Rajesh Kumar Dhanesta, Sr. DR Date of hearing 26.06.2025 Date of pronouncement 18.07.2025 ORDER

PER SATBEER SINGH GODARA, JM

1.

This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2022-23/1048612477(1), dated 11.01.2023 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.

2.

Coming to the assessee’s sole substantive grievance challenging both the learned lower authorities’ action disallowing it’s provision for warranty expenses amounting to Rs.23,55,087/-; we note from a perusal of the assessment order dated 13.11.2019 at page 2 para 3 that the learned assessing authority had followed its corresponding discussion in the preceding assessment year 2016-17 rejecting the very claim which stood upheld in CIT(A)’s order as well passed on 25.07.2019.

3.

We make it clear that the learned Assessing Officer mainly quotes the assessee’s failure to prove the corresponding historical data of the impugned provision for warranty in this regard. That being the case, we sought to know the final outcome of the assessee’s impugned warranty provisions claimed in the said preceding assessment year. Learned counsel very fairly informs us that the tribunal’s order in the assessee’s case in its for AY 2016-17, dated 10.06.2024 has restored back the same back to the Assessing Officer to be decided afresh after verification of all the relevant facts in light of Rotork Control India (P) Ltd. Vs. CIT (2009) 314 ITR 62 (SC). We thus adopt judicial consistency and restore the instant issue back to the Assessing

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