PR COMMISSIONER OF vs. M/S LENOVO (INDIA) P.LTD.

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 6TH DAY OF FEBRUARY 2021 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE NATARAJ RANGASWAMY I.T.A. NO.289 OF 2017 BETWEEN: 1. PR. COMMISSIONER OF INCOME-TAX-4

BMTC COMPLEX, KORAMANGALA

BANGALORE. 2. DEPUTY COMMISSIONER OF INCOME-TAX

CIRCLE-4(1)(1), BANGALORE ... APPELLANTS (BY SRI. JEEVAN J. NEERALGI, ADV.,) AND: M/S. LENOVO (INDIA) P. LTD, FERNS ICON, LEVEL 2 DODDENAKUNDI VILLAGE MARATHALLI OUTER RING ROAD K.R. PURAM HOBLI, BANGALORE-37 PAN: AABCI3372H. ... RESPONDENT (BY SRI. PERCY PARDIWALLA, SR. COUNSEL FOR SMT. VANI H, ADV.) - - - THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 21.10.2016 PASSED IN IT(TP)A NO.373/BANG/2016 FOR THE ASSESSMENT YEAR 2011-12, PRAYING TO DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET

2 ASIDE THE APPELLATE ORDER DATED 21.10.2016 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, BENGALURU, AS SOUGHT FOR IN THE RESPONDENT-ASSESSE'S CASE, IN APPEAL PROCEEDINGS IN IT(TP)A NO.373/BANG/2016 FOR A.Y. 2011-12 AND GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) has been preferred by the revenue. The subject matter of the appeal pertains to the Assessment year 2011-`1. The appeal was admitted by a bench of this Court vide order dated 08.01.2020 on the following substantial questions of law: "(i) Whether, the Tribunal has committed an error of law in holding that the estimate of provision done by the assessee for warranty is scientific and satisfies the condition set out by the Hon'ble Apex court in M/s. ROTORK CONTROLS INDIA PRIVATE LIMITED', 314 ITR 62 and by not taking into account the

3 facts enumerated by the assessing officer in the assessment order, from which it is evident that the assessee has done excessive provisioning for warranty for reducing the tax liability? (ii) Whether, the Tribunal has erred in law in not allowing the additional provision for leave encashment and provision on warranty to the book profit for the purpose of calculating the book profit under Section 115JB of the Income Act, 1961 as the aforesaid amount is unascertained?". 2. For the reasons assigned by us in the judgment passed today in I.T.A.No.1034/2017, the first substantial question of law is answered against the revenue. 3. Learned Senior counsel for the assessee submitted that the second substantial question of law has been answered against the revenue in decision of the Supreme Court in Bharath Earth Movers vs.