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 M/s. Rotork Controls India (P) Ltd. was allowable as a deduction under Section 37 of the Income-tax Act, 1961. The Court emphasized that the warranty obligations were integral to the sales of Valve Actuators, and the Tribunal's consistent view since assessment year 1983-84 supported the reasonableness of the provision. The Court upheld the Tribunal's decision to allow the deduction of Rs.5,18,554, reversing the earlier disallowance by the Assessing Officer and CIT (A).