INCOME TAX ACT, 1961

Business Expenditure - Allowability -Provision for future warranty

The issue arose as to whether the provision for future warranty expenses was contingent liability and accordingly, deduction not allowable under section 37. Held:Expenses on provision for future warranty would be allowable deduction under section 37(1) as it was not a contingent liability.

Income-tax Act, 1961, Section 37(1)

A.Y. :2000-01
Decision: In favour of assessee.

Case Law Analysis:Mysore Lamp Works Ltd. v. CIT [1990] 52 Taxman 260 / 185 ITR 96 (Kar.) [Para 4], CIT v. Gemini Cashew Sales Corpn. [1967] 65 ITR 643 (SC) [Para 5], Sheraton Apparels v. Assistant Commissioner [2002] 256 ITR 20 / 123 Taxman 238 (Bom.) [Para 7], Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585/23 Taxman 37 (SC) [Para 7], Bharat Earth Movers v. CIT [2000] 245 ITR 428/ 112 Taxman 61 (SC) [Para 7], IRC v. Mitsubishi Motors New Zealand Ltd. [1996] 222 ITR 697 (PC) [Para 7].

CIT v. Vinitec Corporation (P) Ltd.