ACIT, Bangalore V. M/s Acer India P. Ltd., Bangalore

ITA 1179/BANG/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95343 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-10-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 12-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R REDDY CIT DRI
• Section: 143(3); 260A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT(TP)A NOS.1179 & 1180(B)/2012 (ASSESSMENT YEARS : 2007-08 & 2008-09) THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-11(1) BANGALORE APPELLANT VS M/S ACER INDIA PVT. LTD. EMBASSY HEIGHTS, 6 TH FLOOR, NO.13, MAGRATH ROAD, BANGALORE PAN NO.AACCA1237A RESPONDENT REVENUE BY : SHRI G.R.REDDY, CIT, DR-I ASSESSEE BY : SHRI SHARATH RAO, CA DATE OF HEARING : 27-10-2015 DATE OF PRONOUNCEMENT : 04-11-2015 O R D E R PER SHRI JASON P BOAZ, AM: THESE ARE APPEALS BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(A)-II, BANGALORE BOTH DATED 21-06-2012 FOR THE ASSESSMENT YEARS 2007-08 & 2008-09. IT(TP)A NOS.1179 & 1180(B)12 2 2. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND SUBMITTED AS FOLLOWS; 2.1 THE ASSESSEE IS A COMPANY ENGAGED IN MANUFACTUR E AND TRADING OF PERSONAL COMPUTERS. NOTE BOOK COMPUTERS, SERVER S, PERIPHERALS AND IT RELATED PRODUCTS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09 ON 30-09-2008 AND THE ASSES SMENT WAS COMPLETED U/S 143(3) OF THE IT ACT ON 02-12-2011. WHILE COMPLETING HE ASSESSMENT THE AO MADE DISALLOWANCE OF RS.10,85,61, 747/- AS WARRANTY PROVISION. DETAILS IN RESPECT OF PROVISION FOR WARRANTY THE MOVEMENT IN THE PROVISION FOR WARRANTY ACCOUNT DURING THE ASSESSMENT YEAR 2007-08 IS OUTLINE BELOW: PARTICULARS 80IB UNIT NON-80IB UNIT TOTAL OP. BALANCE AS ON APRIL, 1, 2006 100,307,498 39,108,300 182,372,553 ADD:PROVISION CREATED DURING THE YEAR 44,089,408 32,267,614 76,357,022 LESS:PAYMENTS MADE DURING THE YEAR 55,730,304 41,840,524 97,630,828 CLOSING BALANCE AS ON MARCH 31,2007 88,606,602 29,535,390 161,098,747 IT(TP)A NOS.1179 & 1180(B)12 3 WE WISH TO SUBMIT THAT THE PROVISION FOR WARRANTY EXPENSES CREATED DURING THE YEAR AMOUNTING TO RS.76,357,022/- REPRESENTS THE AMOUNTS SET ASIDE FO R MEETING WARRANTY OBLIGATION OF ACER AND THE SAME HA S BEEN COMPUTED BASED ON A SCIENTIFIC AND TECHNICAL ESTIM ATE OF COSTS TO BE INCURRED IN MEETING THESE OBLIGATIONS O VER THE PERIOD OF WARRANTY. SUBSEQUENTLY, ACTUAL WARRANTY EXPENDITURE INCURRED DURING THE YEAR AMOUNTING TO RS.97,630,828/- HAS BEEN ADJUSTED AGAINST THE BALAN CE AVAILABLE IN THE PROVISION FOR WARRANTY EXPENSE ACC OUNT. IN THIS REGARD, YOUR GOODSELF HAS PROPOSED TO DISA LLOW THE PROVISION FOR WARRANTY CREATED DURING THE YEAR. FURTHER, YOUR GOODSELF HAS ACKNOWLEDGED THAT THE ACTUAL WAR RANTY EXPENDITURE INCURRED DURING THE YEAR IS HIGHER THAN THE CORRESPONDING PROVISIONS CREATED DURING THE YEAR, A ND THEREBY NOTED THAT A PORTION OF THE ACTUAL WARRANTY EXPENDITURE INCURRED DURING THE YEAR PERTAINS TO TH E OPENING BALANCE IN THE PROVISION FOR WARRANTY EXPENSE ACCOU NT. ACCORDINGLY, YOUR GOODSELF HAS REQUESTED US TO SUBM IT SUBMISSIONS ON ALLOWABILITY OF AMOUNT OF ACTUAL WAR RANTY EXPENDITURE THAT PERTAINS TO OPENING BALANCE IN THE PROVISION FOR WARRANTY EXPENSES ACCOUNT IN COMPUTING THE ASSE SSED INCOME FOR THE AY: 2007-08. IN THIS REGARD WE WISH TO REITERATE THAT THE PROVI SION FOR WARRANTY IS CREATED EVERY YEAR AS PER THE ACCOUNTIN G POLICY FOLLOWED BY THE COMPANY, CONSIDERING THE WARRANTY OBLIGATIONS ATTACHED TO THE SALE OF ACERS PRODUCTS . ACCORDINGLY, THESE PROVISIONS HAVE BEEN CLAIMED AS TAX DEDUCTIBLE EXPENSES ON A YEAR TO YEAR BASIS. FURT HER, THE SAID ISSUE HAS BEEN HELD IN FAVOUR OF THE COMPANY B Y THE IT(TP)A NOS.1179 & 1180(B)12 4 HONBLE BANGALORE ITAT FOR THE AY: 2004-05 VIDE ORD ER ITA NO.774 & 877(BANG.)08 DATED JANUARY 30, 2009. CONSIDERING THAT THE PROVISION FOR WARRANTY CREAT ED ON A SCIENTIFIC BASIS HAS BEEN UPHELD TO BE AN ALLOWABLE EXPENSE IN THE ASSESSEES OWN CASE AND FURTHER CONSIDERING THAT THE SUPREME COURT HAS IN THE CASE OF ROTORK CONTROLS IN DIA PVT.LTD VS CIT (223 CTR 425) UPHELD THAT WARRANTY PROVISIONS ARE AN ALLOWABLE DEDUCTION. IT IS SUBMI TTED THAT THE ENTIRE PROVISION FOR WARRANTY AMOUNTING TO RS.76,357,022/- OUGHT TO BE ALLOWED AS A DEDUCTION. WITHOUT PREJUDICE TO THE ABOVE, IN THE EVENT THE PROVISION FOR WARRANTY EXPENSES CREATED DURING THE YEAR IS PROPOSED TO BE DISALLOWED BY YOUR GOODSELF IN THE COMPUTATION OF TAXABLE INCOME OF THE COMPANY, WE WI SH TO SUBMIT THAT APPROPRIATE RELIGHT OUGHT TO BE GRANTED TO THE COMPANY BY DISALLOWING ONLY THE NET WARRANTY PROVIS ION (AFTER REDUCING THE ACTUAL WARRANTY EXPENSES INCURR ED DURING THE YEAR) AS AGAINST THE GROSS WARRANTY PROV ISION. THE ABOVE VIEW IS IN CONFORMITY WITH THE POSITION ADOPTED BY THE AO IN COMPUTING THE ASSESSEE INCOME OF COMPANY FOR PRIOR AYS WHEREBY ONLY THE NET WARRANT Y PROVISION (AFTER REDUCING THE ACTUAL WARRANTY EXPEN SES INCURRED DURING THE YEAR) HAS BEEN DISALLOWED, I.E IN COMPUTATION OF TAXABLE INCOME OF THE COMPANY OF PRI OR AYS, THE AO HAS DISALLOWED THE PROVISION FOR WARRANTY EX PENSES CREATED DURING THE YEAR AND ALLOWED A DEDUCTION ON LY TOWARDS THE ACTUAL WARRANTY EXPENSES INCURRED DURIN G THE YEAR. AS INDICATED IN THE TABLE ABOVE IN THE CURRENT YEA R AS THE PAYOUTS FOR WARRANTY ARE IN EXCESS OF THE PROVI SION IT(TP)A NOS.1179 & 1180(B)12 5 CREATED DURING THE YEAR, DISALLOWANCE OF THE AMOUNT OF PROVISION WOULD NOT ARISE CONSIDERING THAT THE DISA LLOWANCE WOULD BE FOR THE NET WARRANTY PROVISION (AFTER REDU CING THE ACTUAL WARRANTY EXPENSES INCURRED DURING THE YEAR). 3. THE CIT(A) HELD THAT FOR THE ASSESSMENT 2008-09 THE ASSESSEE ADOPTED SCIENTIFIC METHOD FOR WARRANTY PROVISION, A FTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE. THE CIT(A) OBSERVED TH AT THE METHOD ADOPTED BY THE ASSESSEE IN COMPUTING PROVISIONS OF WARRANTY ON A YEAR TO YEAR BASIS AND THE SAME IS CONSISTENT AND THE ASSES SEE HAS ELABORATELY EXPLAINED THE PROVISION IN THE FINANCIAL STATEMENTS MENTIONED IN HIS SUBMISSIONS. THE CIT(A) POINTED OUT THAT THE METHOD ADOPTED BY THE ASSESSEE WITH REGARD TO THE WARRANTY PROVISIONS RE MAINS THE SAME FOR ALL THESE YEARS. THEREFORE, THE AO WAS NOT CORRECT IN C ONCLUDING THAT THE METHOD FOLLOWED IS DIFFERENT FROM THE EARLIER YEAR. FURTHER, THE ISSUE IS SQUARELY COVERED BY THE ORDERS OF THE ITAT FOR AY: 2004-05 AND 2005-06 AS MENTIONED BY THE ASSESSEE. THEREFORE, THE CIT(A) DIRECTED THE AO TO FOLLOW THE DECISION OF THE HONBLE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 AND GRANT THE RELIEF ACCORDINGLY. 4. FOR THE ASSESSMENT YEAR 2007-08 THE CIT(A) HELD AS FOLLOWS; THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSES SMENT YEAR 2007-08 ON 30-10-2007 AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE IT ACT ON 03-12-2010. W HILE IT(TP)A NOS.1179 & 1180(B)12 6 COMPLETING THE ASSESSMENT THE AO MADE DISALLOWANCE OF RS.7,63,57,022/- AS WARRANTY PROVISION. THIS WAS DISALLOWED BY THE AO AND BROUGHT TO TAX FOR THE VER Y SAME REASON GIVEN BY HIM IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR : 2008-09. THE ONLY ISSUE RAISED IN THE APPEAL IS RELATING TO THE DISALLOWANCE OF WARRANTY PROVISION. THE ISSUE IS SQUARELY COVERED BY THE ORDERS OF THE ITAT FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 AS MENTION ED IN PARA-2 ABOVE. THEREFORE, THE AO IS DIRECTED TO FOL LOW THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2004-05 AND 26005-06 AND GRANT THE RELIEF ACCORDINGLY. 4.1 THE DEPARTMENT HAS FILED GROUNDS OF APPEAL FOR 2007 -08 AS FOLLOWS; 1. THE ORDER OF THE LD.CIT(A) IN SO FAR AS IT IS PR EJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND T HE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIO N AMOUNTING TO RS.7,63,57,022/- MADE ON ACCOUNT OF DISALLOWANCE OF PROVISION OF WARRANTY DEBITED TO P& L ACCOUNT, WITHOUT APPRECIATING THE FACTS AND CIRCUMS TANCES UNDER WHICH THE DISALLOWANCE WAS MADE BY THE AO. 3. THE LD. CIT(A) ERRED IN ALLOWING THE RELIEF, REL YING ON THE DECISION OF THE HONBLE ITAT IN ASSESSEES OWN ACSE FOR EARLIER YEARS, WHICH HAS NOT REACHED ITS FINALITY A ND APPEALS U/S 260QA OF THE IT ACT, 1961 HAVE BEEN FILED BEFOR E THE HONBLE HIGH COURT AGAINST SUCH ORDERS. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE O RDER OF THE CIT(A) BE REVERSED IN SO FAR AS THE ABOVE MENTIONE D ISSUE IS CONCERNED AND THAT OF THE AO BE RESTORED. IT(TP)A NOS.1179 & 1180(B)12 7 5. THE ASSESSEE CRAVES LEAVE TO ADD, TO ALTER, TO A MEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 5. THE DEPARTMENT HAS FILED GROUNDS OF APPEAL FOR ASSESSMENT YEAR 2008-09 AS FOLLOWS; 1. THE ORDER OF THE LD.CIT(A) IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A)HAS ERRED IN DELETING THE ADDITION AMOUNTING TO RS.10,85,61,747/- MADE ON ACCOUNT OF DISALLOWANCE OF PROVISION OF WARRANTY DEBITED TO P & L ACCOUNT, WITHOUT PREJUDICE TO THE FACTS AND CIRCUMS TANCES UNDER WHICH THE DISALLOWANCE WAS MADE BY THE AO. 3. THE LD. CIT(A( HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE RELYING ON THE JUDICIAL DECISION CITED Y T HE ASSESSEE, HOLDING THAT THE PROVISION FOR WARRANTY H AS BEEN CREATED IN A SCIENTIFIC MANNER BASED ON PAST EXPERI ENCE, WITHOUT APPRECIATING THAT THE EXTENT OF PROVISION M ADE DURING THE RELEVANT PREVIOUS YEAR ENDED ON 31-033-2 008 WAS HIGHER THAN THE PROVISION MADE IN THE PRECEDING ASSESSMENT YEARS. 4. THE LD. CIT(A) ERRED IN ALLOWING HE RELIEF, REL YING ON THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FO R EARLIER YEARS, WHICH HAS NOT REACHED ITS FINALITY AND APPEA LS U/S 260A OF THE IT ACT, 1961 HAVE BEEN FILED BEFORE THE HONBLE HIGH COURT AGAINST SUCH ORDERS. 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT TH E ORDER OF IT(TP)A NOS.1179 & 1180(B)12 8 THE CIT(A) BE REVERSED IN SO FAR AS THE ABOVE MENTI ONED ISSUE IS CONCERNED AND THAT OF THE AO BE RESTORED. 6. THE ASSESSEE CRAVES LEAVE TO ADD, TO ALTER, TO AMEND O TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 6. ONLY GROUND NO.3 IS ADDED TO THAT OF GROUNDS RA ISED BY THE DEPARTMENT FOR THE ASSESSMENT YEAR 2007-08. 7. AT THE TIME OF HEARING LEARNED CHARTERED ACCOUN TANT FOR THE ASSESSEE PLACED ON RECORD COPIES OF THE FOLLOWING O RDERS OF THIS TRIBUNAL IN ASSESSEES OWN CASE: (I) ITA NO.774 & 877/BANG/08 DT,30-1-2009 FOR THE ASSESSMENT YEAR 2004-05, AND (II) ITA NO.784/BANG/2010 DT.25-2-2011 FOR ASSESSME NT YEAR 2005-06 ITA 22(BANG)/2011 7.1 BY PLACING THE ABOVE DECISIONS ON RECORD, THE C HARTERED ACCOUNTANT SUBMITTED THAT THE VERY SAME POINT AT IS SUE WAS THE SUBJECT MATTER OF APPEALS IN THOSE TWO APPEALS. 8. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT WITH REFERENCE TO ITA NO.1179(B)/12 THERE IS A REVERSAL WHERE THE PROVISION FOR WARRANTY CREATED DURING THE YEAR IS RS.21,273,806/- AND BY WAY OF NOTE IT HAS BEEN HIGHLIGHTED THAT THE PROVISION FOR WARRANT Y EXPENDITURE IS NET OFF IT(TP)A NOS.1179 & 1180(B)12 9 PAYMENTS MADE DURING THE YEAR. WITH RESPECT TO ASS ESSMENT YEAR 2008- 09 THE COUNSEL REFERRED TO PAGES 201 & 202 WHERE TH E PROVISION FOR WARRANTY CREATED DURING THE YEAR IS RS.108,561,747/ - AND IS HIGHLIGHTED BY NOTE THAT PROVISION FOR WARRANTY EXPENDITURE IS NET OFF MADE DURING THE YEAR. 9. WE HAVE ALSO HEARD THE LEARNED DEPARTMENTAL REPR ESENTATIVE AND CONSIDERED THE FACTS AND MATERIALS ON RECORD INCLUD ING THE DECISIONS CITED BEFORE US. 9.1 WHILE DEALING WITH THE ISSUE IN THE ORDER DATED 30-1-2009 IN ITA NO. 774/BANG/2010 IT HAS BEEN OBSERVED AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE CONSIDE RED VIEW THAT THE ASSESSEES CASE CLEARLY FALLS IN LINE WITH THE LEGAL RATIO SET OUT BY THE VARIOUS APPELLATE DECISIONS CI TED AT BAR IN SO FAR AS THE PROVISION FOR WARRANTY STOOD CRYST ALLIZED AS SOON AS THE SALE WAS MADE WHICH A CUSTOMER WOULD LI KE TO BE FULFILLED WITHIN THE WARRANTY PERIOD AND IS AT T HE COST OF AN ASSESSEES GOODWILL. THEREFORE, THE RESIDUAL AMO UNT PURPORTED TO HAVE BEEN HELD BY THE ASSESSING OFFICE R AS AN EXCESS PROVISION CANNOT BE CONSIDERED AS A CONTINGE NT PROVISION AND NOT AN ASCERTAINED LIABILITY. THE WAR RANTY PERIOD CONTINUES BEYOND AN YEAR WHICH FACT WAS RIGH TLY CONSIDERED BY THE LD.CIT(A) CONFINING TO THE VARIOU S DECISIONS SUCH AS IBM INDIA LTD. (SUPRA) REPORTED I N 290 ITR IT(TP)A NOS.1179 & 1180(B)12 10 (AT) 183. SIMILAR VIEW HAS BEEN TAKEN BY OTHER CO-O RDINATE BENCHES OF THE TRIBUNAL THEREFORE REQUIRES NO FURTH ER DELIBERATION. IN THE LIGHT OF THE ABOVE, WE HOLD TH E VIEW THAT THE DECISION OF THE LD.CIT(A) REQUIRES NO FURTHER I NTERFERENCE ON THE ISSUE. THE REVENUES APPEAL STANDS DISMISSED . 10. AGAIN IN THE ORDER DATED 25-2-2011 IN ITA NO.78 4/BANG/2010, IT HAS BEEN OBSERVED AS UNDER: 11.2 THE ASSESSEE CREATES PROVISION FOR WARRANTY BASED ON THE ESTIMATION OF EXPENDITURE LIKELY TO BE INCURRED ON THE PAST SALES MADE ON YEARLY BASIS AT THEN PREVAILING MARKE T PRICES FOR SPARES AND LABOUR. FOR THE RELEVANT PREVIOUS YE AR, THE ASSESSEE ESTIMATED THE WARRANTY LIABILITY AT RS.12,76,77,530/- AND CREATED A PROVISION ONLY FOR RS.12,16,75,204/- IN THE BOOKS OF ACCOUNT BY CHARGI NG A PROVISION OF RS.8,24,29,136/- TO THE DEBIT IN THE P &L ACCOUNT AND CLAIMED IT AS ITA 22(BANG)/2011 PAGE 5 OF 7 DED UCTION. THE ASSESSEE COMPANY HAD CREATED THE PROVISION BASE D ON THE ESTIMATION OF WARRANTY LIABILITY, WHICH IS BASE D ON FAILURE RATES OF THE PAST YEAR DATA/EXPERIENCE AND INDUSTRY TRENDS AND NOT ON ADHOC BASIS. THE ASSESSEE HAS NOT CHANGE D THE METHOD OF COMPUTING THE WARRANTY PROVISION AND IT H AS BEEN FOLLOWED CONSISTENTLY. 11.3 THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA PVT. LTD. 314 ITR 62 WOULD BE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. THE H ONBLE SUPREME COURT HAS HELD THAT PROVISION MADE ON PAST EXPERIENCE IS A SCIENTIFIC METHOD AND IS THE MOST A PPROPRIATE METHOD. THE RELEVANT EXTRACT OF THE DECISION IS PRO VIDED BELOW:- IT(TP)A NOS.1179 & 1180(B)12 11 IN THIS CASE, WE ARE CONCERNED WITH PRODUCT WARRAN TIES. TO GIVE AN EXAMPLE OF PRODUCT WARRANTIES, A COMPANY DE ALING IN COMPUTERS GIVES WARRANTY FOR A PERIOD OF 36 MONTHS FROM THE DATE OF SUPPLY. THE SAID COMPANY CONSIDERS FOLLOWIN G OPTIONS: (A) ACCOUNT FOR WARRANTY EXPENSE IN THE YE AR IN WHICH IT IS INCURRED; (B) IT MAKES A PROVISION FOR WARRANTY ONLY WHEN THE CUSTOMER MAKES A CLAIM; AND (C) IT PR OVIDES FOR WARRANTY AT 2% OF TURNOVER OF THE COMPANY BASED ON PAST EXPERIENCE (HISTORICAL TREND) UNDER THE CIRCUMSTANCES, THE THIRD OPTION IS MOST A PPROPRIATE BECAUSE IT FULFILLS ACCRUAL CONCEPT AS WELL AS THE MATCHING CONCEPT. FOR DETERMINING AN APPROPRIATE HISTORICAL TREND, IT IS IMPORTANT THAT THE COMPANY HAS A PROPER ACCOUNTING SYSTEM FOR CAPTURING RELATIONSHIP BETWEEN THE NATURE OF TH E SALES, THE WARRANTY PROVISIONS MADE AND THE ACTUAL EXPENSES IN CURRED AGAINST IT SUBSEQUENTLY.. IF WARRANTY PROVISIONS ARE BASED ON EXPERIENCE AND HISTORICAL TREND(S) AND IF THE WORKING IS ROBUST TH EN THE QUESTION OF REVERSAL IN THE SUBSEQUENT TWO YEARS, I N THE ABOVE EXAMPLE, MAY NOT ARISE IN A SIGNIFICANT WAY. 11. IN THE ASSESSEES OWN CASE IN IDENTICAL FACTS F OR THE IMMEDIATELY PRECEDING YEAR, THE TRIBUNAL IN ITA NO. 22/BANG/2011 ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 16.03.2012 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, FOLLOWING THE ORDE RS OF THE TRIBUNAL FOR EARLIER YEARS NAMELY. 2004-05 AND 2005-06. IT(TP)A NOS.1179 & 1180(B)12 12 12. FOLLOWING THE ABOVE DECISIONS FOR THE EARLIER Y EARS PASSED BY THE CO-ORDINATE BENCH OF BANGALORE, WE HOLD THAT TH E CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF PROVISIO N FOR WARRANTY AND ACCORDINGLY DISMISS THE GROUND OF APPEAL OF THE REV ENUE ON THIS ISSUE. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 4 TH NOVEMBER, 2015. SD/- SD/- (JASON P BOAZ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04-11-2015 PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE