Grundfos Pumpas India Ltd. Vs DCIT (Madras High Court)
The appellate authority, after considering the submissions made by the Assessee as well as the detailed note submitted by the Assessee, held that the provision has been made by the Assessee on a scientific basis and it is an ascertained liability. Examining the nature of business done by the Assessee, the CIT(A) pointed out that the Assessee is engaged in the business of manufacturing, assembling and marketing of pumps and components and they have explained the basis for working the said provision for warranty, which is based on past experience and not on adhoc basis. Further, the CIT(A) pointed out that the said amount is based on turnover of the last three years and it is based on the provision for expenses on repairs during the warranty period as contemplated in the sale agreements. Keeping in view the above factual position, the CIT(A) accepted the case of the Assessee and the additions made by the Assessing Officer was deleted.
Tribunal failed to examine the factual issue and made a factually incorrect statement that the details were not submitted.
For all the aforesaid reasons, we are of the considered view that the Tribunal has erroneously reversed the order passed by the CIT(A) that too without assigning any reasons and without considering the materials, which are available on record. Accordingly, the Assessee is entitled to succeed in this appeal.
