CIT vs. MARUTI SUZUKI INDIA LTD

ITA - 992 / 2011HC Delhi01 September 20112 pages

For Petitioner: NP SAHNI

AI SummaryDismissed

What did the High Court hold?

The Tribunal was correct in law in deleting the additions made by the Assessing Officer on account of provisions for warranties. The High Court, in its decision dated 24th January, 2011, in ITA 1154/2009 in Commissioner of Income Tax Vs. Whirlpool India Ltd., held that such a provision for warranty is allowable as a deduction. This view was based on the Supreme Court's judgment in Rotork Controls India P. Ltd. Vs. CIT. Furthermore, the High Court noted that for subsequent years, the Revenue itself had allowed such claims, supporting the assessee's position on grounds of consistency. Therefore, no question of law arose from the ITAT's decision. The appeals were dismissed.

What were the facts?

The appeals by the Revenue challenge the order of the Income Tax Appellate Tribunal (ITAT) concerning assessment year(s) not specified. The dispute revolves around the deletion of additions made by the Assessing Officer (AO) on account of provisions for warranties. The assessee had made a provision for potential warranty claims from buyers of vehicles. The ITAT deleted these additions. The Revenue's contention is that the ITAT was incorrect in law in allowing this deletion. The High Court notes that for subsequent years, the Revenue itself has allowed such claims, and also relies on its own prior decision in Commissioner of Income Tax Vs. Whirlpool India Ltd., which in turn relied on the Supreme Court's judgment in Rotork Controls India P. Ltd. Vs. CIT.

What were the issues?

1. Whether the Income Tax Appellate Tribunal was correct in law in deleting the additions made by the Assessing Officer on account of provisions for warranties, which is a question of law. Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the ITAT was incorrect in law in deleting the additions made by the AO on account of provisions for warranties. The Revenue accepted that other stated questions did not arise in the appeals. The Revenue's appeal relies on the High Court's decision in Commissioner of Income Tax Vs. Whirlpool India Ltd. (dated 24th January, 2011), which cited the Supreme Court's judgment in Rotork Controls India P. Ltd. Vs. CIT.

AI-generated summary — verify with the full judgment below

#B&9 o/o OL,9.2OLL present: Mr. N.P. Sahni, Sr.Standing Counsel for the appellant/Revenue. Mr. Ajay Vohra, Advocate with Ms Kavita Jha and Mr. Somnath Shukla, Advocates for the respondent/assessee. +tTA 99r./20L1 & ITA 992/20L1 The only question that arises for consideration in these two appeals '1+=as to whether the Income Tax Appellate Tribunal was correct in law in deleting the additions made by the Assessing Officer on account of provisions for warranties. Mr. Sahni accepts the position that other questions are wrongly stated which do not arise in these appeals. The .provision ior warranty was made by the assessee against the possible claims which may be received by the assessee from the buyers of the vehicles under the warranty provision. It is held by this Court in its I decision dated 24th Janu ary, 20II in ITA 115412009 in Commissioner of Igcome las Vs. Whirpool India Ltd. that such a warranty provision created in the aforespid manner is allowable as deduction. While taking lf1" aforesaid view, this Court had relied upon the judgment of the 1 Supreme Court in the case of Rotork Controls lndia P' Ltd' Vs' CIT' 314 lrR 62, 2011:DHC:14578-DB

? I .-+ /M,Ld . 'A.K. slKRl,f, L? INDERMEET KAUR,J. We rhay also hote that for subsequent years this claim has been allowed by the Revenue itself. On the ground of consist"n.y also such claim was allowable. We are, therefbre of the opinion that no question of law arises on this aspect. These appeals are accordingly dismissed. SEPTEMBER OI., 2O"I.1 gkb f, 2011:DHC:14578-DB

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