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IV. Useful Case Laws:
1. CIT Vs. Maruti Suzuki India Ltd., ITA NO. 903/2011, 993/2011 & 1029/2011, Pronounced on: 14.12.2012, High Court of Delhi
Provision
made for warranty in respect of such sophisticated goods would be
entitled to deduction from the gross receipts U/s 37.
In view ruling of the Supreme Court in Rotork Controls India Ltd. vs. CIT 314 ITR 62 (SC)
“A provision is a liability which can be measured only by using a
substantial degree of estimation. A provision is recognized when: (a) an
enterprise has a present obligation as a result of a past event; (b) it
is probable that an outflow of resources will be required to settle the
obligation; and (c) a reliable estimate can be made of the amount of
the obligation. If these conditions are not met, no provision can be
recognized. The principle is that if the historical trend indicates that
a large number of sophisticated good were being manufactured in the
past and the facts show that defects existed in some of the items
manufactured and sold, then provision made for warranty in respect of
such sophisticated goods would be entitled to deduction from the gross
receipts under Section 37.” This question too, is therefore answered in
favour of the assessee, and against the revenue.
(Please click here for Judgment)
2. Moser Bear India Ltd., Vs. Dy. CIT, WP(C) 7677/2011, Date of Order: 06-12-2012, High Court of Delhi
For
reopening of assessment U/s 147 there must be “tangible material”
bearing a “live link with the formation of the belief” otherwise
revising an order of assessment U/s 263.
When the
assessment is completed, as in the present instance, under Section 143
(3), after the AO goes through all the necessary steps of inquiring into
the same issue, the reasons for concluding that reassessment is
necessary, have to be strong, compelling, and in all cases objective
tangible material. This court discerns no such tangible materials which
have a live link that can validate a legitimate formation of opinion, in
this case. It is not enough that the AO in the previous instance
followed a view which no longer finds favour, or if the latter view is
suitable to the revenue; those would squarely be change in opinion.
Perhaps, in given fact situations, they can be legitimate grounds for
revising an order of assessment under Section 263; but not for
re-opening it, under proviso to Section 147.
(Please click here for judgment)
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