THE PR. COMMISSIONER OF INCOME TAX -3 vs. DCM SHRIRAM LIMITED

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ITA/266/2022HC DelhiDLHC01043608202117 August 2022Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA2 pages
AI SummaryDismissed

What did the High Court hold?

The Delhi High Court held that no substantial question of law arises for consideration in the present appeal. The Court noted that the ITAT had followed a predecessor Division Bench's order in the Respondent/Assessee's own case for the assessment year 2008-09. In that prior order, the Court had held that bonds categorized as 'current investment assets' by the Assessee, and whose value diminished, represented a revenue loss. The Revenue's stand that this was merely a notional loss was not tenable, as bonds held as stock-in-trade could be valued at the lower of cost or market rate. Consequently, the appeal was dismissed.

What were the facts?

The Principal Commissioner of Income Tax -3 (Appellant/Revenue) has filed an Income Tax Appeal challenging an order dated 30th October, 2019, passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 5222/Del/2016 for the assessment year 2009-10. The Revenue contends that the ITAT erred in allowing the Assessee's (DCM Shriram Limited/Respondent) claim of a loss amounting to Rs. 7,21,00,000/- due to the diminution in the value of fertilizers bonds. The Assessee argues that this issue is no longer res integra, referencing a predecessor Division Bench's ruling in their own case for assessment year 2008-09, which held that the diminishing value of bonds constitutes a revenue loss.

What were the issues?

1. Whether the Assessee could claim a loss for the diminution in value of fertilizers bonds against the sale of fertilizers (question of law). Assessee's Contention: The Respondent/Assessee argues that the proposed question of law is no longer res integra. They rely on a predecessor Division Bench's order in their own case for the assessment year 2008-09, which held that the diminishing value of bonds is a revenue loss. The Assessee further contends that bonds held as stock-in-trade can be valued at market rate or cost, whichever is less, making the loss allowable. Revenue's Contention: The Appellant/Revenue states that the ITAT erred in allowing the Assessee's claim of loss for diminution in value of fertilizers bonds of Rs. 7,21,00,000/-.

AI-generated summary — verify with the full judgment below

$~S-228 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 266/2022 THE PR. COMMISSIONER OF INCOME TAX -3 ..... Appellant Through: Mr.Ruchir Bhatia, Sr.Standing Counsel with Ms.Mansie Jain, Advocate. versus DCM SHRIRAM LIMITED ..... Respondent Through: Mr.V.P.Gupta, Advocate with Mr.Anunav Kumar, Advocate. CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA O R D E R % 17.08.2022 Present Income Tax Appeal has been filed challenging the Order dated 30th October, 2019 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 5222/Del/2016 for the assessment year 2009-10. Learned Counsel for the Appellant states that the ITAT has erred in allowing Assessee's claim of loss for diminution in value of fertilizers bonds of Rs.7,21,00,000/-. Per contra, learned counsel for the Respondent, who appears on advance notice, states that the proposed question of law is no longer res integra, as in the Respondent/Assessee’s own case qua the assessment year 2008-09, the learned predecessor Division Bench has held that the diminishing value of bond is a revenue loss. The relevant portion of the said 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 15/06/2026 at 02:30:33

order is reproduced hereinbelow:- “4. The first issue that arises for consideration is whether the Assessee could have claimed loss for the diminution in value of fertilizer bonds against the sale of fertilizers. 5. The assessment order itself shows that in its books, the Assessee categorised the bonds under the head ‘current investment assets’. In that view of the matter, the diminishing value of the bonds not being held as long term investment was in the nature of a revenue loss and could have been claimed as such by the Assessee. The stand of the Revenue that this was only a notional loss and not allowable, is not tenable since bonds held as stock-in-trade can be valued at market rate or cost whichever is less.” Keeping in view the aforesaid order as well as the fact that the ITAT has followed the aforesaid order passed by the learned predecessor Division Bench, this Court is of the opinion that no substantial question of law arises for consideration in the present appeal. Accordingly, the present appeal is dismissed. MANMOHAN, J MANMEET PRITAM SINGH ARORA, J AUGUST 17, 2022 TS 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 15/06/2026 at 02:30:33

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