Provision for warranty on eligible sales made during the relevant previous year is an ascertained liability and allowable as a deduction — as held by DelTrib in Woodward Governor India Ltd v Addl CIT — In favour of: Others.
The assessee is entitled to revise the provision for warranty with reference to eligible sales made by it for the period of October, 2004 to March, 2005, and claim deduction of the incremental increase in the provision, if any. On this account, the issue of quantification of such allowable claim is remitted back to the file of the AO.
Decided on: 16 September 2011.
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