ITAT Delhi Deletes Depreciation Disallowance on Intangibles for TV Today Network:

ITAT Delhi Deletes Depreciation Disallowance on Intangibles for TV Today Network

The Delhi Bench “C” of the Income Tax Appellate Tribunal (ITAT) on 18 May 2026 deleted the depreciation disallowance made against T.V. Today Network Limited, holding that intangible commercial rights acquired under a slump sale arrangement constitute legitimate “business or commercial rights” eligible for depreciation under the Income-tax Act, 1961. The Bench comprising Judicial Member Vikas Awasthy and Accountant Member Brajesh Kumar Singh allowed the assessee’s appeal and reversed the findings of the lower authorities. The tribunal pointed out that, “The intangible assets acquired by the assessee were in the nature of commercial rights constituting an effective tool of trade for carrying on the business.”

T.V. Today Network Limited, engaged in the business of news and FM radio broadcasting, had acquired the digital business operations of its holding company, Living Media India Limited (LMIL), on a slump sale basis through a business transfer agreement for a total consideration of Rs 20 crore. Based on an independent valuation report prepared by PricewaterhouseCoopers (PWC), the assessee capitalised Rs. 60,970,000/- as intangible assets and claimed depreciation of Rs. 15,242,500/- at the prescribed rate of 25%.

During assessment proceedings for AY 2018-19, the assessing officer disallowed the depreciation claim, alleging that the restructuring transaction between related entities was structured merely to create artificial goodwill and claim excess depreciation. The AO further held that since the written-down value of such assets in the books of the transferor company was either nil or unascertainable, the actual cost in the hands of the assessee should also be treated as nil. The Commissioner of Income Tax (Appeals) upheld the disallowance.

Before the Tribunal, the assessee contended that the acquisition was a genuine slump sale transaction executed through a valid business transfer agreement and supported by an independent valuation exercise. It was further submitted that the revenue had already accepted the slump sale consideration of Rs 20 crore in the assessment proceedings of the seller company, LMIL.

The Tribunal observed that the Assessing Officer failed to bring any material on record to discredit or rebut the valuation report prepared by PwC. It further noted that the digital assets and commercial rights acquired by the assessee facilitated the continuation and expansion of its media operations and therefore qualified as “business or commercial rights of a similar nature” under Section 32(1)(ii) of the Act.

“The AO has not brought any tangible adverse material to disregard the independent valuation report or to establish that the transaction was colourable in nature.”

The Bench also took note of the fact that the corresponding transaction value had already been accepted in the hands of the transferor company. It held that once the slump sale itself was accepted as genuine, the depreciation claim arising from allocation of consideration towards eligible intangible assets could not be rejected merely on suspicion.

Therefore, the ITAT directed the deletion of the depreciation disallowance of Rs 1,52,42,500 and allowed the appeal filed by the assessee, while dismissing the revenue’s appeal.

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