Whether the estimated expenditure on warranty is allowable under income tax act???????
2 Replies
Amir
(Learner)
(4016 Points)
Replied 22 March 2010
Dear Shaffi,
Estimated Expenditure is nothing but a "Provision for Expense" and as such "Provisions are not allowed as deduction in computing the Total Income..........
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 22 March 2010
It would really depend on the type of business and the basis on which the provision for warranty is claculated. If it is an ascertained liability then the same could be allowable on a case to case basis.
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