Allowability of provision for warranty liability claimed by a product seller

RELEVANT PARAGRAPHS: 6. On the issue as to whether the provisions for warranty liability is deductible for income-tax purposes, a useful reference may be made to a decision of the Hon’ble Kerala High Court in the case of CIT v. Indian Transformers Ltd. (2004) 270 ITR 259, where the Hon’ble Kerala High Court found that the provision for after sales services of transformers on the facts of that case was a reasonable one in view of the actual expenses, which materialized in a latter year, so that it was also allowable, following the decision of the Hon’b;e Supreme Court in the c...