Assessee is\u00a0 engaged in manufacturing of engineering goods. It made provision for warranty expenses in relation to a contract with Chhattisgarh Government for supply, installation, and commissioning of solar photovoltaic (SPV) irrigation pumps, which included a five-year (60 months) on-site warranty. Assessing Officer held\u00a0 that since it was first year of operation for SPV pumps, warranty provision was deemed a contingent liability under AS-29, as it lacked a reliable estimate based on past data. He further concluded that warranty provision was an ad-hoc estimate without a scientific basis. He thus, classified provision as a contingent liability and disallowed. CIT(A) up held the order of the AO.\u00a0 Tribunal held that\u00a0\u00a0 assessee calculated provision for warranty expenses based on discounted cash flow (DCF) method, which considered inflow from solar project, five-year warranty period and discount rate of 14 per cent. Provision for warranty expenses made by assessee in a\u00a0 in a scientifically sound and consistent method which complied with AS-29.\u00a0 Disallowance is deleted.(AY. 2017-18)<\/p>\n","protected":false},"excerpt":{"rendered":"
S.37(1): Business expenditure-Warranty provision-Provision is calculated based on DCF method in a scientifically sound and consistent method which complied with Accounting Standard 29 (AS-29)-Allowable as deduction.[S. 145] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-51148","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-diY","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51148","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=51148"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51148\/revisions"}],"predecessor-version":[{"id":51149,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51148\/revisions\/51149"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=51148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=51148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=51148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}