Judgment K. Raviraja Pandian, J. The appeal is filed by the revenue against the order of the Income Tax Appellate Tribunal, Madras A Bench 210. 2006 in ITA No.273/Mds/2005 for the assessment year 2001-02. 2. This appeal wasadmitted on the following substantial question of law : "Whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the provision for future warranty expenses is contingent liability or is allowable under section 37 of the Income Tax Act, 1961?" 3. The facts are : The assessee is engaged in manufacture and supply of cement plant, engineering and structural drawings, goods and services. The assessing officer did not allow the deduction in respect of provision for warranty of a sum of Rs.9,79,68,895/-. Against that order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) and the Commissioner of Income Tax (Appeals) directed the assessing officer to modify the order and pass necessary consequential order. Against that order, the department preferred an appeal before the Tribunal and the Tribunal, following the assessees own case for the assessment year 2000-01 and following the decision of this Court in CIT v. Beema Manufacturers P. Ltd., (2003) 130 Taxman 400, held that the provisions for warranty made by the assessee was allowable deduction because the provision made by the assessee towards the warranty is a liability on the contingency of the goods becoming defective within the terms of warranty clause and therefore the same was allowable as business expenditure and dismissed the departmental appeal. Aggrieved by the same, the department has preferred this appeal. 4. The issue is now settled by the Supreme Court in the case of Rotork Controls India P. Ltd. v. CIT, (2009) 314 ITR 62, wherein it was held that the warranty became an integral part of the sale price; in other words, the warranty stood attached to the sale price of the product. Warranty provision had to be recognised because the assessee had a present obligation as a result of past events resulting in an outflow of resources and a reliable estimate could be made of the amount of the obligation. The value of the contingent liability like the warrant expense, if properly ascertained and discounted on accrual basis, can be an item of deduction under section 37 of the Act. The value of the contingent liability like the warrant expense, if properly ascertained and discounted on accrual basis, can be an item of deduction under section 37 of the Act. The principle of estimation of the contingent liability is not the normal rule. It would depend on the nature of the business, the nature of sales, the nature of the product manufactured and sold and the scientific method of accounting adopted by the assessee. It would also depend upon the historical trend and upon the number of articles produced. A provision is a liability which can be measured only by using a substantial degree of estimation. A provision is recognized when : an enterprise has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation and held that the provision made for warranty in respect of such sophisticated goods would be entitled to deduction from the gross receipts under section 37 of the Act. 5. Following the said judgment, this Court in assessees own case in the case of CIT III v. M/s. FL Smedth Ltd., Tax Case (Appeal) No.341 of 2004 by order dated 09.06.2009, after extracting paragraph 7 of the judgment of Supreme Court cited supra, answered the question of law in favour of the assessee and against the revenue. 6. It is not in dispute that the facts in this case are similar to the appeal in T.C. No.341 of 2004. Therefore, following the judgments of the apex Court Rotork Controls India P. Ltd. v. CIT, (2009) 314 ITR 62, and the Division Bench of this Court, CIT III v. M/s. FL Smedth Ltd., Tax Case (Appeal) No.341 of 2004, the questions of law are answered in favour of the assessee and against the revenue. The appeal is dismissed. No costs.