The Income Tax Appellate Tribunal (ITAT) Bangalore, has dismissed a plea by Toyota Kirloskar Motors Pvt. Ltd. wherein it had made a claim of Rs.1,67,32,832 on account of the claim of the excess warranty provision.
In this case, assessment under section 143(3) read with section 144C was completed and subsequently, the Commissioner of Income Tax (CIT) (LTU) Bangalore found the order erroneous and prejudicial to the interest of revenue because the Assessing Officer (AO) had allowed an amount of Rs.1,67,32,832 claimed as warranty provision by the assessee for the Assessing Year 2008-09 which otherwise related to earlier years. Accordingly, the CIT set aside the order and the AO concluded the assessment making the addition of Rs.1,67,32,832 on account of the claim of the excess warranty provision. With regard to the disallowance, the tribunal observed that in the assessment year under consideration the assessee has claimed an excess deduction of Rs.1,67,32,832. It was found that the provision is not created during the year, but it pertains to provisions created in the earlier years that have been allowed in the respective assessment years.
Vice President N V Vasudevan and Accountant Member Chandra Poojari dismissed the appeal and held, “The contention of the ld. DR is that the assessee had not furnished requisite details before the lower authorities for claiming such deduction in AY 2010-11. Admittedly, this deduction cannot be allowed in the assessment year under consideration as warranty provision was allowed on an actual basis. However, the actual claim of the assessee that it should be allowed as a deduction in AY 2010-11 on the ground that it was offered to tax in AY 2011-12, requires examination of the records by the AO on the production of the same by the assessee in the relevant AY 2010-11. This claim of the assessee cannot be considered in the present AY 2008-09, as the AY 2010-11 or 2011-12 is not before us for adjudication. The assessee may take appropriate remedial action in the relevant assessment year if so advised. With these observations, we dismiss the ground relation to the allowability of warranty provisions in this assessment year.”
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