Per Bench. - These six appeals, three filed by the taxpayer and three filed by the revenue are cross-appeals which are directed against three separate orders passed by the learned CIT(A) dated 31-12-2004, 21-12-2006 and 31-1-2007 for assessment years 2001-02, 2002-03 and 2003-04 respectively. As some common issues are involved therein, the same have been heard together and are being disposed of by this single consolidated order.

ITA No. 1181/Delhi/2005 - Revenue’s appeal for assessment year 2001-02

2. In ground No. 1, the revenue has challenged the action of the learned CIT(A) in deleting the addition of Rs. 2,25,38,920 made by the Assessing Officer on account of provision for warranty while computing the total income of the taxpayer under the normal provisions and also in directing the Assessing Officer to exclude the said provision while computing the book profit under section 115JB.

3. In its profit and loss account, warranty charges amounting to Rs. 4,04,12,572 were debited by the taxpayer company. The said amount was inclusive of the warranty expenses actually incurred by the taxpayer company to the extent of Rs. 1,78,73,650 and the remaining amount of Rs. 2,25,38,920 was o