THE COMMISSIONER OF INCOME TAX vs. M/S. KIRLOSKAR ELECTRIC CO LTD

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ITA/116/2009HC KarnatakaKAHC01019220200919 January 2015Bench: B.VEERAPPA,N.KUMAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court followed its previous judgment in the assessee's own case and the Apex Court's decision in Rotork Controls India (P) Ltd. The court held that the provision for warranty claims was allowable expenditure.

What were the facts?

The Revenue appealed against the ITAT's order upholding the assessee's warranty claim. The Assessing Officer had disallowed a provision for warranty claims, noting no claims were made by customers for four years despite a one-year warranty period.

What were the issues?

Whether a provision for warranty claims made by the assessee is allowable as an expenditure, considering the period of warranty and the absence of claims.

Which sections of the Income-tax Act were involved?

Section 260-A

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- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 19TH DAY OF JANUARY 2015 PRESENT

THE HON’BLE MR.JUSTICE N. KUMAR

AND

THE HON’BLE MR. JUSTICE B. VEERAPPA

I.T.A. NO. 116 OF 2009

BETWEEN:

1.

THE COMMISSIONER OF INCOME TAX C R BUILDING, QUEENS ROAD BANGALORE

2.

THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE - 11(5) C R BUILDING, QUEENS ROAD BANGALORE ... APPELLANTS

(BY SRI. K V ARAVIND, ADV.)

AND

M/S. KIRLOSKAR ELECTRIC CO. LTD. P B NO. 5555, MALLESHWARAM WEST BANGALORE ... RESPONDENT

(BY SRI. K.P.KUMAR, SR. COUNSEL, FOR M/S KING & PARTRIDGE)

THIS ITA IS FILED U/S.260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 17-10-2008 PASSED IN CO.NO.21 & 22/BNG/2008 IN ITA.NO.1179/BANG/2007, FOR THE ASSESSMENT YEAR 2002-03, PRAYING TO FORMULATE THE

- 2 - SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDER PASSED BY THE ITAT BANGALORE IN CO.NO.21 & 22/BNG/2008 IN ITA NO.1179/ BANG/2007,DATED 17-10-2008 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER OF INCOME TAX, CIRCLE- 11(5), BANGALORE IN THE INTEREST OF JUSTICE AND EQUITY.

THIS ITA COMING ON FOR FINAL HEARING THIS DAY, N. KUMAR J. DELIVERED THE FOLLOWING:

JUDGMENT

The Revenue has preferred this appeal against the order passed by the Tribunal, upholding the warranty claim of the assessee.

2.

The substantial question of law which arises for consideration is as under:

Whether the Assessing Authorities were correct in holding that the provision for warranty claim of Rs.1,07,39,000/- made by the assessee is allowable as an expenditure without examining the facts as appreciated by the Assessing Officer where a categorical finding is recorded that the assessee in respect of the previous year 01/04/2001 to 31/03/2002 had issued warranties for a period of one year and there was no claim from the customers up to the date of assessment ie., four years as admitted by the assessee and consequently recorded a perverse finding ?

- 3 -

3.

This court had an occasion to consider the said question in the assessee’s case itself, in ITA No. 121/09, which was decided on 27/10/2014. Following the judgment of the Apex Court in ROTORK CONTROLS INDIA P. LTD. VS. COMMISSIONER OF INCOME TAX [(2009) 314 ITR 62 (SC)], the said substantial question of law was answered in favour of the assessee and against the Revenue.

4.

For the same reasons and following the said judgment, the substantial question of law, in this case also, is answered in favour of the assessee and against the Revenue. There is no merit in this appeal.

Appeal is dismissed.

SD/- JUDGE

SD/- JUDGE Rd/-

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