The provision for warranty was being made on the basis of the past experience and had been computed in a systematic and scientific manner, these warranty expenses were towards expenses which had been incurred or were likely to be incurred within the period for which the warranty had been assured to the customers against the sale of products and as such, such expenses were deductible as business expenditure. Such expenditure having been incurred wholly for the purpose of business was fully allowable as business expenditure.( AY.2009 -10)
Dy. CIT v. BCH Electric Ltd. (2018) 63 ITR 58 (SN) (Kol.)(Trib.)
S. 37(1) : Business expenditure—Provision for warranty expenses — provision made based on transactions carried out in preceding three years on scientific basis and method consistently followed in past such expenditure is allowable. [S. 145]