SRF LTD vs. ASSTT COMMISSIONER OF INCOME TAX CIRCLE 10 OSD & ANR.
What did the High Court hold?
The High Court held that all fact-finding authorities under the Income Tax Act, 1961, had concurrently decided against the appellant. The Court found that the assessee was essentially seeking a reappreciation of evidence, which is impermissible at the High Court stage under its limited jurisdiction under Section 260A of the Act. The findings of the authorities below were not considered perverse. Therefore, no substantial question of law arose for consideration. The appeal was dismissed.
What were the facts?
The appeal is filed by SRF Ltd. (assessee) against the order dated March 19, 2025, of the Income Tax Appellate Tribunal (Tribunal), which rejected the assessee's appeal. The dispute concerns the disallowance of Rs. 2,04,00,000/- written off by the assessee from total purchases of approximately Rs. 2000 Crores. The Assessing Officer (AO) disallowed the write-off for failure to produce relevant documents. The Dispute Resolution Panel (DRP) and the Tribunal affirmed this disallowance. The assessee contended that the inventory was rightly written off and deductible, and the AO's disallowance was cursory. The Tribunal's finding that the assessee took a double deduction was challenged as perverse.
What were the issues?
1. Whether the write-off of inventory amounting to Rs. 2,04,00,000/- is an allowable deduction under the Income Tax Act, 1961? Assessee's contentions: The inventory was rightly written off and the appellant was entitled to claim deduction. The AO's disallowance was cursory. The Tribunal's finding of double deduction was perverse, as the write-off was due to moisture content reduction and not a separate line item deduction. The assessee relied on its arguments presented before the lower authorities. Revenue's contentions: The revenue supported the concurrent findings of the AO, DRP, and Tribunal. No specific arguments for the revenue are recorded in the judgment, other than implicitly supporting the disallowance.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R %
2026
The present appeal is directed against the order dated 19.03.2025 passed by the Income Tax Appellate Tribunal (hereinafter referred to as ‘Tribunal’) rejecting the appellant’s appeal. The appeal involved various grounds and most of them have been decided in assessee’s favour, except the ground in relation to the disallowance of amount to the tune of Rs. 2,04,00,000/- which the assessee had written off out of the total purchase of around Rs. 2000 Crores.
Learned counsel for the appellant submitted that the inventory has been rightly written off and the appellant was entitled to claim deduction thereof, but the Assessing Officer had disallowed the same observing that the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/07/2026 at 15:36:41
appellant has failed to produce the relevant documents.
Inviting Court’s attention towards internal page no. 26 of the draft assessment order dated 29.12.2019 (paperbook page no. 272), he submitted that the Assessing Officer has cursorily disallowed the amount of inventory which the assessee had written off.
He submitted that the Dispute Resolution Panel and the Tribunal have affirmed the disallowance without considering appellant’s arguments in its true perspective.
In this regard, he took the Court through para no. 46 of the ITAT’s order and submitted that the Tribunal’s finding is perverse, as it had observed that the assessee had taken double deduction in respect of writing off of the inventory as separate line item.
We have heard learned counsel for the appellant and perused the material available on record, including para no. 46 of the Tribunal’s order and corresponding finding recorded by the Assessing Officer.
The appellant’s main contention is that while purchasing the raw material and entering the same into its books of accounts, the moisture content was reduced by the assessee and therefore, there is no question of double deduction.
Having heard learned counsel for the appellant, we find that all the authorities given under the Income Tax Act, 1961 entrusted with fact finding exercise have concurrently held against the appellant.
What is being sought to be argued, is essentially an appreciation rather reappreciation of evidence. At the stage of High Court, it is impermissible within the limited jurisdiction under Section 260A of the Act of 1961. 10. We do not feel that the findings recorded by the authorities below are in This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/07/2026 at 15:36:41
any manner perverse warranting our interference. No question of law much less a substantial question of law is involved in the present appeal, for which it is hereby dismissed.
The appeal stands disposed of alongwith the pending application.
DINESH MEHTA, J.
RAJNEESH KUMAR GUPTA, J. JULY 9, 2026/nk
This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 13/07/2026 at 15:36:41
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