M/S. Rotork Controla India (P) Ltd vs Commnr. Of Income Tax, Chennai

The Supreme Court ruled that the provision for warranty claims made by the appellant under Section 37 of the Income-tax Act, 1961, is allowable as a deduction, as it constitutes a realistic estimate of anticipated liabilities arising from sales. The Court emphasized the principle of consistency, noting that the Tribunal had consistently allowed such deductions since assessment year 1983-84 based on the nature of the business and warranty obligations integral to sales. The Court upheld the Tribunal's decision to allow the deduction of Rs.5,18,554 for the assessment year 1991-92, reversing the earlier disallowance by the Assessing Officer.