CIT Vs. HERO AUTO LTD

JUDGEMENT

(1.) LD. counsel for the Revenue at the outset states that Annexure 1 to this appeal is the assessment order passed pursuant to the order under Section 263 of the Income Tax Act, 1961 (,,Act, for short). He prays for and is granted permission to place on record the original assessment order dated 26.12.2006. This order was made subject matter of an order under Section 263 of the Act dated 24th March, 2009 by the Commissioner of Income Tax (,,CIT, for short). By the impugned order dated 8th July, 2011, the Income Tax Appellate Tribunal (,,Tribunal, for short) has allowed the appeal of the respondent-assessee and has quashed the order dated 24.3.2009, under Section 263 of the Act, passed by the CIT on two aspects :

(2.) ON the question of warranty claim, it is noticeable that this issue was raised by the Assessing Officer during the course of original assessment proceedings and the assessee had written a letter dated 21.11.2006 giving complete details of the provision for warranty and had relied upon decision of Delhi High Court in the case of Commissioner of Inc ome Tax v. Vinitec Corporation. Pvt. Ltd., (2005) 278 ITR 337. The CIT in the order dated 24.3.2009 has not disputed the aforesaid factual position and has stated as under: "i) The assessees claim that warranty issue is covered by Jurisdictional High Court decision in the case of CUT Vs Vinitec Corporation is not fully correct. The Honble High Court had held that if the provisions is made on scientific basis then only it is an allowable expenditure."

(3.) ON the second aspect, it is noticed that the claim for deduction under Section 35DDA was made by the assessee for the first time in assessment year 2002-03. 1/5th of the amount payable under the voluntary retirement was allowed as a deduction. In this year, the Assessing Officer has followed the earlier assessment order. The CIT in the order dated 24th March, 2009 has observed as under: -