VIACOM 18, MEDIA PVT LTD ,MUMBAI vs. PCIT-8, MUMBAI

ORDER PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against revisional order dated 18/03/2025 passed by the learned Principal Commissioner of Income-tax, Mumbai-8 [in short ‘the learned PCIT’] under section 263 of Income-tax Act, 1961 (in short ‘the Act’) wherein he set aside the assessment order passed by the faceless assessment unit (in short ‘the Assessing Officer’) holding it to be erroneous insofar as prejudicial to the interest of the R udicial to the interest of the Revenue. The grounds raised by the evenue. The grounds raised by the assessee in its appeal are reproduced as under: assessee in its appeal are reproduced as under:

On the facts and in the circumstances of the case and in law, the On the facts and in the circumstances of the case and in law, the On the facts and in the circumstances of the case and in law, the learned Principal Commissioner of learned Principal Commissioner of Income tax ('PCIT) has: Income tax ('PCIT) has: Order under section 263 is without jurisdiction, unwarranted and Order under section 263 is without jurisdiction, unwarranted and Order under section 263 is without jurisdiction, unwarranted and bad in law 1. erred in invoking revision proceedings under section 263 of the 1. erred in invoking revision proceedings under section 263 of the 1. erred in invoking revision proceedings under section 263 of the Income Tax Act, 1961 ('the Act') without appreciating that Income Tax Act, 1961 ('the Act') without appreciating that Income Tax Act, 1961 ('the Act') without appreciating that assessment order passed by the assessment order passed by the National e-Assessment Centre Assessment Centre ('NeAC') ('Assessment ('NeAC') ('Assessment ('NeAC') ('Assessment Order') Order') Order') was was was neither neither neither erroneous erroneous erroneous nor nor nor prejudicial to the interest of the revenue; prejudicial to the interest of the revenue; 2. failed to appreciate that the Assessment Order was passed 2. failed to appreciate that the Assessment Order was passed 2. failed to appreciate that the Assessment Order was passed after verification of relevant details and documentary evidence after verification of relevant details and documentary evidence after verification of relevant details and documentary evidence and and application application of of mind mind vis-à-vis vis vis issues issues pertaining pertaining to to depreciation on goodwill and carry forward of losses; depreciation on goodwill and carry forward of losses; 3. failed to appreciate that the NeAC had taken a plausible view 3. failed to appreciate that the NeAC had taken a plausible view 3. failed to appreciate that the NeAC had taken a plausible view supported by judicial precedents and prospective amendment in supported by judicial precedents and prospective amendment in supported by judicial precedents and prospective amendment in Section 32 of the Ac Section 32 of the Act and had allowed depreciation on goodwill; t and had allowed depreciation on goodwill; Without prejudice to above, the learned PCIT has: Without prejudice to above, the learned PCIT has: Disallowance of Depreciation on Goodwill Disallowance of Depreciation on Goodwill 4. erred in directing the learned Jurisdictional Assessing Officer 4. erred in directing the learned Jurisdictional Assessing Officer 4. erred in directing the learned Jurisdictional Assessing Officer ('AO') to verify and disallow the claim of depreciati ('AO') to verify and disallow the claim of depreciation on goodwill on on goodwill as consistently disallowed by the Department in other years; as consistently disallowed by the Department in other years; as consistently disallowed by the Department in other years; 5. failed to appreciate that in view of prospective amendment in 5. failed to appreciate that in view of prospective amendment in 5. failed to appreciate that in view of prospective amendment in Section 32 of the Act, depreciation on goodwill is allowable for Section 32 of the Act, depreciation on goodwill is allowable for Section 32 of the Act, depreciation on goodwill is allowable for and upto AY 2020 and upto AY 2020-21; 6. without prejudice to the a 6. without prejudice to the above, failed to appreciate that out of bove, failed to appreciate that out of total amount of depreciation of Rs. 195,32,57,760, only an total amount of depreciation of Rs. 195,32,57,760, only an total amount of depreciation of Rs. 195,32,57,760, only an Amount of Rs. 1,87,75,81,932 pertains to depreciation on Amount of Rs. 1,87,75,81,932 pertains to depreciation on Amount of Rs. 1,87,75,81,932 pertains to depreciation on goodwill on merger of Prism TV Pvt. Ltd. and Rs. 85,655 pertains goodwill on merger of Prism TV Pvt. Ltd. and Rs. 85,655 pertains goodwill on merger of Prism TV Pvt. Ltd. and Rs. 85,655 pertains to goodwill on acquisition of Studio to goodwill on acquisition of Studio 18 and the balance amount of 18 and the balance amount of Rs. 7,55,90,173 pertains to depreciation on Voot platform (which Rs. 7,55,90,173 pertains to depreciation on Voot platform (which Rs. 7,55,90,173 pertains to depreciation on Voot platform (which is an intangible asset) and not goodwill. is an intangible asset) and not goodwill. Short-grant of carry forward of losses grant of carry forward of losses

7. erred in determining the amount of carried forward losses at 7. erred in determining the amount of carried forward losses at 7. erred in determining the amount of carried forward losses at Rs. 6,86,23,58,7 Rs. 6,86,23,58,774 instead of Rs. 10,22,35,12,612, as correctly 74 instead of Rs. 10,22,35,12,612, as correctly allowed by the the NeAC. 2. Briefly stated facts of the case are that the stated facts of the case are that the assessee Viacom18 assessee Viacom18 Media Private limited Media Private limited is a company incorporated on 19/12/1995 is a company incorporated on 19/12/1995 under the provisions of the Companies A he provisions of the Companies Act, 1956. During ct, 1956. During the year under consideration, the assessee was engag under consideration, the assessee was engaged in business ed in business activities inter-alia, broadcasting of television channels; marketing , broadcasting of television channels; marketing , broadcasting of television channels; marketing and advertising airtime on television channels; distribution of and advertising airtime on television channels; distribution of and advertising airtime on television channels; distribution of television channels; over television channels; over-the-top(OTT) and digital cont top(OTT) and digital content delivery platform; licensing and merchandising products; ing and merchandising products; ing and merchandising products; organising live events and production/distribution of films/programs etc. events and production/distribution of films/programs etc events and production/distribution of films/programs etc 2.1 The assessee assessee filed its regular return of income for the return of income for the assessment year under consideration on 29/11/2019, which was assessment year under consideration on 29/11/2019, which was assessment year under consideration on 29/11/2019, which was further revised on 30/03/2020 declarin further revised on 30/03/2020 declaring total loss of rupees ( g total loss of rupees (-) 289,31,48,390/-. The return filed by the assessee was selected for . The return filed by the assessee was selected for . The return filed by the assessee was selected for the scrutiny assessment the scrutiny assessment and statutory notices under the Income and statutory notices under the Income- Act were issued and complied with Act were issued and complied with. During the scrutiny proce . During the scrutiny proceeding transfer pricing reference was also made for determination of the transfer pricing reference was also made for determination of the transfer pricing reference was also made for determination of the arm’s-length price of the international transactions carried out by length price of the international transactions carried out by length price of the international transactions carried out by the assessee. The faceless assessment unit faceless assessment unit passed assessment passed assessment order under section 143(3) order under section 143(3) read with section 144B of th read with section 144B of the Act on 26/09/2022 determining total loss at (-) ₹281,32,98, 26/09/2022 determining total loss at 2,98,884/- after making variations proposed by the learned Transfer Pricing O ations proposed by the learned Transfer Pricing Officer. ations proposed by the learned Transfer Pricing O 2.2 Subsequently, the learned PCIT called for the Subsequently, the learned PCIT called for the Subsequently, the learned PCIT called for the assessment records and after examination, he was of the view that the records and after examination, he was of the view records and after examination, he was of the view assessment order passed by the Assessing Officer was erroneous assessment order passed by the Assessing Officer was erroneous assessment order passed by the Assessing Officer was erroneous insofar as prejudicial to the interest of the R udicial to the interest of the Revenue evenue, on following two issues:

(i) incorrect allowance of depreciation on incorrect allowance of depreciation on ‘goodwill goodwill’ acquired on amalgamation which was denied in earlier a amalgamation which was denied in earlier assessment years ssessment years 2016-17 and 2017 17 and 2017-18 by the Assessing Officer 18 by the Assessing Officer (ii) incorrect determination of carry incorrect determination of carry-forward of business losses forward of business losses 2.3 In view of above observations, the learned PCIT issued a show view of above observations, the learned PCIT issued a show view of above observations, the learned PCIT issued a show cause notice dated 22/11/ cause notice dated 22/11/2024 calling upon the assessee a 2024 calling upon the assessee as why the assessment order should not be revised on above two issues sessment order should not be revised on above two issues sessment order should not be revised on above two issues. The Authorised Representative epresentative(AR) of the assessee submitted that of the assessee submitted that the faceless assessment unit after due consideration of the assessment unit after due consideration of the assessment unit after due consideration of the submission of the assessee and submission of the assessee and carrying out required enquiries, carrying out required enquiries, accepted the claim of depreciation on goodwill the claim of depreciation on goodwill, which , which arose on amalgamation of ‘Prism TV P Ltd Prism TV P Ltd’ with the assessee with the assessee. It was contended that revisionary proceedings against assessment order contended that revisionary proceedings against assessment order contended that revisionary proceedings against assessment order cannot be initiated unless conjunctive conditions of section 263 are cannot be initiated unless conjunctive conditions of section 263 are cannot be initiated unless conjunctive conditions of section 263 are satisfied. It was further contended that Assessing Officer had duly It was further contended that Assessing Officer had duly It was further contended that Assessing Officer had duly examined all the records at the time of assessment proceeding with examined all the records at the time of assessment proceeding examined all the records at the time of assessment proceeding due application of mind and therefore even the deeming condition mind and therefore even the deeming conditions mind and therefore even the deeming condition under Explanation- 2 to section 263 2 to section 263 are not fulfilled. The assess not fulfilled. The assessee also filed submissions on the merit of the both the issues and also filed submissions on the merit of the both the issues and also filed submissions on the merit of the both the issues and submitted that depreciation on goodwill and carry forward losses submitted that depreciation on goodwill and carry submitted that depreciation on goodwill and carry have been allowed lawfully have been allowed lawfully by the Assessing Officer. The learned by the Assessing Officer. The learned PCIT was however not convinced ver not convinced with the reply of the reply of the assessee. He accordingly held the assessment order a ngly held the assessment order as erroneous insofar as s erroneous insofar as prejudicial to the interest of the R udicial to the interest of the Revenue on both the issues and evenue on both the issues and setaside the order with the direction to setaside the order with the direction to the Assessing Officer the Assessing Officer for passong a fresh assessment order after making ne a fresh assessment order after making necessary inquiries. cessary inquiries. Aggrieved, the assessee is an appeal before the Income-tax Aggrieved, the assessee is an appeal before the Income Aggrieved, the assessee is an appeal before the Income Appellate Tribunal (in short the ‘Tribunal’) by way of raising Appellate Tribunal (in short the ‘Tribunal’) by way of raising Appellate Tribunal (in short the ‘Tribunal’) by way of raising grounds as reproduced above. grounds as reproduced above.

3.1 The facts qua the issue in dispute of depreciation on goodwill the issue in dispute of depreciation on goodwill the issue in dispute of depreciation on goodwill are that during the year under consideration the assessee claimed are that during the year under consideration the assessee claimed are that during the year under consideration the assessee claimed depreciation on goodwill and intangible assets having details as depreciation on goodwill and intangible assets having details as depreciation on goodwill and intangible assets having details as under: Sr. Particulars Amount (Rs.) by the Assessee Remarks by the Assessee No i. 85,655 Depreciation on goodwill Depreciation on goodwill Hon’ble Mumbai ITAT allowed claim Hon’ble Mumbai ITAT allowed claim on acquisition of Studio on acquisition of Studio of depreciation in the first year of depreciation in the first year itself, i.e. AY 2008- 09 18 (a division of Network 18 (a division of Network 18 Media & Investments 18 Media & Investments Pvt. Ltd.) in A Y 2008- 09 Pvt. Ltd.) in A Y 2008 ii. 1,87,75,81,932 Depreciation on goodwill Depreciation on goodwill Goodwill recognized in view of the Goodwill recognized in view of the resulting on account of resulting on account of scheme of amalgamation approved scheme of amalgamation approved by Hon’ble Bombay High Court. amalgamation of Prism amalgamation of Prism by Hon’ble Bombay High Court. TV Pvt. Ltd. ('Prism TV') TV Pvt. Ltd. ('Prism TV') No Goodwill was existed in the existed in the into Viacom 18 in AY into Viacom 18 in AY books of amalgamating company books of amalgamating company 2016-17 and hence, the Goodwill had purely and hence, the Goodwill had purely arisen on amalgamation, eligible for arisen on amalgamation, eligible for depreciation upto 1.4.2021. depreciation upto 1.4.2021. 7,55,90,173 iii. Depreciation on Depreciation on There is no Goodwill in this asset. There is no Goodwill in this asset. Intangible Rights ntangible Rights (Voot This is an intangible asset is an intangible asset Platform) capitalized in AY 2017-18 on which 18 on which depreciation was never disputed by depreciation was never disputed by the Department. 195,32,57,760 Total 3.2 The learned counsel for the assessee referred to paperbook learned counsel for the assessee referred to paperbook learned counsel for the assessee referred to paperbook page 1, which is a copy of notice under section 143(2) of the copy of notice under section 143(2) of the copy of notice under section 143(2) of the Act and submitted that return of income was selected for the scrutiny for submitted that return of income was selected for the scrutiny for submitted that return of income was selected for the scrutiny for verification of the various issues including one of the issues as verification of the various issues including one of the issues as verification of the various issues including one of the issues as depreciation claim of the assessee. of the assessee.

The learned counsel, further referre The learned counsel, further referred to paperbook page d to paperbook pages 16 to 22, which is a copy of noti which is a copy of notice under section 142(1) of the A ce under section 142(1) of the Act and submitted that the Assessing Officer v ted that the Assessing Officer vide query No. ide query No. 8 (Paper Book page-18) asked the detail 18) asked the details of claim of depreciation. The learned of claim of depreciation. The learned counsel submitted that assessee counsel submitted that assessee duly responded to the queries duly responded to the queries raised by the Assessing Officer. He referred to copy of the reply filed raised by the Assessing Officer. He referred to copy of the reply filed raised by the Assessing Officer. He referred to copy of the reply filed by the assessee which is available on paperbook pages 23-32 along by the assessee which is available on paperbook page by the assessee which is available on paperbook page with notes to financial statement available on paperbook page 289. with notes to financial statement available on paperbook page 289. with notes to financial statement available on paperbook page 289. show cause notice issued Further the learned counsel referred to Further the learned counsel referred to a show cause notice issued by the Assessing Officer by the Assessing Officer, a copy of which is available on paperbook available on paperbook pages 33 to 37 and submitted that the Assessing Officer specifically 33 to 37 and submitted that the Assessing Officer specifically 33 to 37 and submitted that the Assessing Officer specifically asked the assessee the assessee to support claim of depreciation to support claim of depreciation on goodwill with documentary evidences. The Assessing Officer in said show with documentary evidences. The Assessing Officer in said show with documentary evidences. The Assessing Officer in said show cause notice also referred to large business cause notice also referred to large business loss set off against other set off against other heads of income. In the submission filed in response to the show heads of income. In the submission filed in response to heads of income. In the submission filed in response to cause notice, a copy of which is available o cause notice, a copy of which is available on paperbook page 38 to n paperbook page 38 to 45, the assessee provided complete details of computation of the 45, the assessee provided complete details of computation of the 45, the assessee provided complete details of computation of the depreciation on goodwill as well as justification for depreciation on goodwill as well as justification for its its claim. It was also submitted that similar claim was allowed by the faceless also submitted that similar claim was allowed by the faceless also submitted that similar claim was allowed by the faceless assessment unit in assessee’s own assessment unit in assessee’s own case for assessment year 2018 case for assessment year 2018- 19. The assessee also 19. The assessee also filed a copy of the order of the Coordinate filed a copy of the order of the Coordinate Bench of Income-tax Appellate Tribunal ( in short the ‘T tax Appellate Tribunal ( in short the ‘T tax Appellate Tribunal ( in short the ‘Tribunal’) dated 29/01/2016, wherein the claim of depreciation on the wherein the claim of depreciation on the goodwill on account of merger of t goodwill on account of merger of the ‘studio 18 studio 18’ division in assessment year 2008 assessment year 2008-09 was allowed to the assessee. The assessee 09 was allowed to the assessee. The assessee also filed copy of the order of the Hon’ble Bombay High Court also filed copy of the order of the Hon’ble Bombay High Court also filed copy of the order of the Hon’ble Bombay High Court approving the scheme of amalgamation with approving the scheme of amalgamation with ‘Prism TV private Prism TV private limited’ along with valuation report supp along with valuation report supporting value of the goodwill orting value of the goodwill arising on amalgamation with the prisoner TV private limited. arising on amalgamation with the prisoner TV private limited. arising on amalgamation with the prisoner TV private limited.

3.3 The learned counsel for the The learned counsel for the assessee referred to para referred to paragraph 3 (three) of the assessment order and submitted that Assessing of the assessment order and submitted that Assessing of the assessment order and submitted that Assessing Officer after due examination/verificat Officer after due examination/verification of the claim of the ion of the claim of the assessee and after considering the judicial decisions accepted the assessee and after considering the judicial decisions accepted the assessee and after considering the judicial decisions accepted the claim of depreciation on goodwill by way of express finding. claim of depreciation on goodwill by way of express finding. claim of depreciation on goodwill by way of express finding. Regarding the quantum of business loss to be carried forward, the Regarding the quantum of business loss to be carried forward, the Regarding the quantum of business loss to be carried forward, the learned counsel submitted that the Ass learned counsel submitted that the Assessing Officer has duly essing Officer has duly verified the brought forward losses adjusted against profits of verified the brought forward losses adjusted against profits of verified the brought forward losses adjusted against profits of earlier years and after verification only he computed the losses of earlier years and after verification only he computed the losses of earlier years and after verification only he computed the losses of ₹1022,35,12,612/- to be carried forward to next assessment year. to be carried forward to next assessment year. to be carried forward to next assessment year.

4. The learned Departmental Repres Departmental Representative (DR) (DR) on the other hand submitted that the Assessing Officer has not carried out the hand submitted that the Assessing Officer has not hand submitted that the Assessing Officer has not inquiries which he ought to have been carried out on the issues of inquiries which he ought to have been carried out on the issues of inquiries which he ought to have been carried out on the issues of depreciation of the goodwill as well as on the issue of carry forward depreciation of the goodwill as well as on the issue of carry depreciation of the goodwill as well as on the issue of carry of business losses and of business losses and therefore the assessment order is deemed to therefore the assessment order is deemed to be erroneous insofar as prej be erroneous insofar as prejudicial to the interest of the R udicial to the interest of the Revenue under Explanation-2 to section 263 of the A 2 to section 263 of the Act.

[Explanation 2.-For the purposes of this section, it is hereby decla For the purposes of this section, it is hereby decla For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer an order passed by the Assessing Officer 52[or the Transfer Pricing Officer, [or the Transfer Pricing Officer, as the case may be,] shall be deemed to be erroneous in so far as it is as the case may be,] shall be deemed to be erroneous in so far as it is as the case may be,] shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal prejudicial to the interests of the revenue, if, in the opinion prejudicial to the interests of the revenue, if, in the opinion 53[Chief Commissioner or Chief Commissioner or Principal] Commissioner [Chief Commissioner or Chief Commissioner or Principal] Commissioner [Chief Commissioner or Chief Commissioner or Principal] Commissioner or Commissioner,- (a) the order is passed without making inquiries or verification which should the order is passed without making inquiries or verification which should the order is passed without making inquiries or verification which should have been made 48 48; (b) the order is passed allowing any relief without inquiring into the claim; the order is passed allowing any relief without inquiring into the claim; the order is passed allowing any relief without inquiring into the claim; (c) the order has not been made in accordance with any order, direction or the order has not been made in accordance with any order, direction or the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or instruction issued by the Board under (d) the order has not been passed in accordance with any decision which is the order has not been passed in accordance with any decision which is the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or prejudicial to the assessee, rendered by the jurisdictional High Court or prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] Supreme Court in the case of the assessee or any other Supreme Court in the case of the assessee or any other 5.1 On plain reading of the above provision reading of the above provision, we find that , we find that clauses (a) and (b) specify that (a) and (b) specify that if Assessing Officer fails in carrying out the in carrying out the inquiries, which he ought to have carried out in the facts and , which he ought to have carried out in the facts and , which he ought to have carried out in the facts and circumstances of the case circumstances of the case, then the assessment order is deemed to nt order is deemed to be erroneous insofar as prejudicial to the interest of the revenue. be erroneous insofar as prejudicial to the interest of the revenue. be erroneous insofar as prejudicial to the interest of the revenue. Therefore for invoking of the deeming E re for invoking of the deeming Explanation xplanation, we have to examine whether the Assessing Officer had hether the Assessing Officer had carried out the inquiries carried out the inquiries which he ought to have carried out i which he ought to have carried out in the facts and circumstances n the facts and circumstances of the case.

As far as the first issue of depreciation on goodwill is concerned, the As far as the first issue of depreciation on goodwill is concerned, the As far as the first issue of depreciation on goodwill is concerned, the Assessing Officer in his first notice under section 142(1) of the Act Assessing Officer in his first notice under section 142(1) of the Assessing Officer in his first notice under section 142(1) of the dated 19/08/2021(PB dated 19/08/2021(PB-18) raised following query:

“8. With respect to With respect to depreciation claimed during the year, kindly depreciation claimed during the year, kindly provide the following details: provide the following details: 1. Detail of the asset/block 1. Detail of the asset/block ii) Opening WDV ii) Opening WDV iii) Addition and deletion during the year iii) Addition and deletion during the year iv) Depreciation charged on assets/block T iv) Depreciation charged on assets/block T v) Detail of additional depreciation claimed, if v) Detail of additional depreciation claimed, if any along with the any along with the justification for the same justification for the same v) Date of purchase and date of put to use for the assets acquired v) Date of purchase and date of put to use for the assets acquired v) Date of purchase and date of put to use for the assets acquired during the year along with documentary during the year along with documentary evidence”

5.2 In response to above query, the assessee response to above query, the assessee through reply through reply dated 03/09/2021 filed submission 03/09/2021 filed submission(PB-27) before the Assessing Officer, before the Assessing Officer, relevant part of which is reproduced as under: which is reproduced as under:

“8. Depreciation claimed during the year 8. Depreciation claimed during the year The details with respect to fixed assets, opening WDV, additions The details with respect to fixed assets, opening WDV, additions The details with respect to fixed assets, opening WDV, additions and deletions made during the year and depreciation charged on and deletions made during the year and depreciation charged on and deletions made during the year and depreciation charged on the assets are enclosed as Annexure 3. The Company has not assets are enclosed as Annexure 3. The Company has not assets are enclosed as Annexure 3. The Company has not claimed any additional depreciation during claimed any additional depreciation during AY 2019-20. 20.” 5.3 Along with the above reply with the above reply, the assessee enclosed depreciation the assessee enclosed depreciation chart as per the provisions of the in A s per the provisions of the in Act along with a note specifying ct along with a note specifying as how in assessment year 2016 in assessment year 2016-17 for the first time the assessee 17 for the first time the assessee introduced goodwill in its books of accounts and claimed introduced goodwill in its books of accounts and claimed introduced goodwill in its books of accounts and claimed depreciation thereon. The relevant part of the note appended to the depreciation thereon. The relevant part of the note appended to the depreciation thereon. The relevant part of the note appended to the depreciation chart is reproduced as under: depreciation chart is reproduced as under:

“3. In AY 2016 3. In AY 2016-17, as per the Bombay High Court Order dated 12 Bombay High Court Order dated 12 August 2016 Prisrn TV Private Limited has merged with Viacom18 August 2016 Prisrn TV Private Limited has merged with Viacom18 August 2016 Prisrn TV Private Limited has merged with Viacom18 Media Private Limited with effect from 1 April 2015 on a going Media Private Limited with effect from 1 April 2015 on a going Media Private Limited with effect from 1 April 2015 on a going concern basis. As per the said Order, the Company has paid a concern basis. As per the said Order, the Company has paid a concern basis. As per the said Order, the Company has paid a consideration of Rs 19,340,040,368 consideration of Rs 19,340,040,368 for the acquisition of Prism TV for the acquisition of Prism TV Private Private Private Limited. Limited. Limited. Out Out Out of of of the the the said said said consideration consideration consideration of of of Rs Rs Rs 19,340,040,368, Rs 1780,22,58,316 was paid towards various 19,340,040,368, Rs 1780,22,58,316 was paid towards various 19,340,040,368, Rs 1780,22,58,316 was paid towards various intangibles (customer relationship, skilled workforce, business intangibles (customer relationship, skilled workforce, business intangibles (customer relationship, skilled workforce, business contracts, know contracts, know- how, business information, trademarks, list of emarks, list of customers, distributors/suppliers, rights, processes, marketing customers, distributors/suppliers, rights, processes, marketing customers, distributors/suppliers, rights, processes, marketing and distribution strategies, commercial rights, intellectual property and distribution strategies, commercial rights, intellectual property and distribution strategies, commercial rights, intellectual property rights, licenses, permits, trademarks, copyrights, patents, quotas, rights, licenses, permits, trademarks, copyrights, patents, quotas, rights, licenses, permits, trademarks, copyrights, patents, quotas, approvals, lease. tenancy rights, perm approvals, lease. tenancy rights, permissions, incentives, grants issions, incentives, grants and various other rights, title, interest, certificates, registrations and various other rights, title, interest, certificates, registrations and various other rights, title, interest, certificates, registrations under various legislations, contracts, agreements, consents) under various legislations, contracts, agreements, consents) under various legislations, contracts, agreements, consents) acquired by the Company (reflected as goodwill in the books of the acquired by the Company (reflected as goodwill in the books of the acquired by the Company (reflected as goodwill in the books of the Company). The Company). The assessee submits that it is eligible for depreciation s that it is eligible for depreciation @ 25% on the written down value of the aforesaid goodwill based @ 25% on the written down value of the aforesaid goodwill based @ 25% on the written down value of the aforesaid goodwill based on the following decisions: on the following decisions:  CIT, Kolkata v. Smifs Securities (24 taxmann.com 222(SC)] CIT, Kolkata v. Smifs Securities (24 taxmann.com 222(SC)] CIT, Kolkata v. Smifs Securities (24 taxmann.com 222(SC)]

 Areva T & D India Ltd vs DCIT ((2012) 345 ITR 421 (Delhi Areva T & D India Ltd vs DCIT ((2012) 345 ITR 421 (Delhi Areva T & D India Ltd vs DCIT ((2012) 345 ITR 421 (Delhi High Cour High Court)  Viacom 18 vs ACIT (ITA No. 7336/Mum/2012) [Mumbai Viacom 18 vs ACIT (ITA No. 7336/Mum/2012) [Mumbai Viacom 18 vs ACIT (ITA No. 7336/Mum/2012) [Mumbai Tribunal] Tribunal]  B. Raveendran Pillai vs CIT ((2010) 194 Taxman 477 B. Raveendran Pillai vs CIT ((2010) 194 Taxman 477 B. Raveendran Pillai vs CIT ((2010) 194 Taxman 477 (Kerala HC)] (Kerala HC)]  CIT vs. Hindustan Coca Cola Beverages Pvt. Ltd (2011) 198 CIT vs. Hindustan Coca Cola Beverages Pvt. Ltd (2011) 198 CIT vs. Hindustan Coca Cola Beverages Pvt. Ltd (2011) 198 TAXMAN 104 (Delhi HC) TAXMAN 104 (Delhi HC)  CIT vs. Hindustan Coca Cola Beverages Pvt. Ltd [(2009) 34 CIT vs. Hindustan Coca Cola Beverages Pvt. Ltd [ CIT vs. Hindustan Coca Cola Beverages Pvt. Ltd [ SOT 171 (Delhi Tribunal)) SOT 171 (Delhi Tribunal))  Skyline Caterers (P.) Ltd. vs. ITO ((2008) 20 SOT 266 Skyline Caterers (P.) Ltd. vs. ITO ((2008) 20 SOT 266 Skyline Caterers (P.) Ltd. vs. ITO ((2008) 20 SOT 266 (Mumbai Tribunal)] (Mumbai Tribunal)]  Bosch Ltd. vs. CIT (2009 Bosch Ltd. vs. CIT (2009-TIOL-736-ITAT-Bang (Bangalore Bang (Bangalore Tribunal)) Tribunal))  Kotak Forex Brokerage Ltd. vs. ACIT ((2009) (33 SOT 237) Kotak Forex Brokerage Ltd. vs. ACIT ((2009) (33 SOT 237) Kotak Forex Brokerage Ltd. vs. ACIT ((2009) (33 SOT 237) (Mumbai Tribunal)] (Mumbai Tribunal)]  A.P. Paper Mills Ltd. vs. ACIT ((2010) 128 TTJ 596 Paper Mills Ltd. vs. ACIT ((2010) 128 TTJ 596 Paper Mills Ltd. vs. ACIT ((2010) 128 TTJ 596 (Hyderabad Tribunal)]2 (Hyderabad Tribunal)]2  Mylan Laboratories Limited vs. Dy. CIT 16(2) [ITA No. Mylan Laboratories Limited vs. Dy. CIT 16(2) [ITA No. Mylan Laboratories Limited vs. Dy. CIT 16(2) [ITA No. 2335/Hyd./2018] (Hyderabad Tribunal) 2335/Hyd./2018] (Hyderabad Tribunal) 5.4 Thereafter, again the Assessing Officer issued further query on , again the Assessing Officer issued further query on , again the Assessing Officer issued further query on the issue of depreciation o the issue of depreciation of the goodwill in his show cause notice f the goodwill in his show cause notice dated 17/09/2022 (PB dated 17/09/2022 (PB-34), relevant part of which is reproduced as 34), relevant part of which is reproduced as under:

“1. Deprecation claimed during the year: 1. Deprecation claimed during the year:- There is a huge addition of Rs. 13,00,40,337/ There is a huge addition of Rs. 13,00,40,337/-, In plant and , In plant and machinery for a period of 180 days or machinery for a period of 180 days or more and addition of Rs. more and addition of Rs. 6,41,38,569/ 6,41,38,569/- in plant and machinery for a period of less than 180 in plant and machinery for a period of less than 180 days addition of Rs. 3,60,56,776/ days addition of Rs. 3,60,56,776/- in Building for a period of 180 in Building for a period of 180 daysor more and addition of Rs. 1,08,92,052/ daysor more and addition of Rs. 1,08,92,052/- in Building for a in Building for a period of less than 180 days. Add period of less than 180 days. Addition of Rs. 33,71,323/ ition of Rs. 33,71,323/- in furniture and Fixture for a period of 180 days or more and furniture and Fixture for a period of 180 days or more and furniture and Fixture for a period of 180 days or more and addition of Rs.7,58,570/ addition of Rs.7,58,570/- in furniture and fixture for a period of in furniture and fixture for a period of less than 180 days. Please provide documentary evidence/ proof less than 180 days. Please provide documentary evidence/ proof less than 180 days. Please provide documentary evidence/ proof of addition, Please provide details of of addition, Please provide details of intangible rights goodwill with in absence of documentary intangible rights goodwill with in absence of documentary intangible rights goodwill with in absence of documentary evidences depreciation claimed may be disallowed. Please give evidences depreciation claimed may be disallowed. Please give evidences depreciation claimed may be disallowed. Please give your explanation. your explanation.

1. Large business loss set off against other head of income. 1. Large business loss set off against other head of income. 1. Large business loss set off against other head of income. As per ITR Schedule As per ITR Schedule -CFL details of losses to be carried CFL details of losses to be carried forward to further years and as per ITR of A.Y. 2012 further years and as per ITR of A.Y. 2012-13 to A.Y. 2019 13 to A.Y. 2019-20 carried forward and setoff losses are as under: carried forward and setoff losses are as under:-

1.

3. As per ITR Schedule 3. As per ITR Schedule-CFL you have shown carried forward loss CFL you have shown carried forward loss of Rs. 32,68,43,710/ of Rs. 32,68,43,710/- whereas you have shown in ITR for the whereas you have shown in ITR for the A.Y. 2014-15 in computation of total income. Part 15 in computation of total income. Part-B, it is losses carried B, it is losses carried forward is Rs. 32,68,43,710/ forward is Rs. 32,68,43,710/- after setoff of losses of Rs. after setoff of losses of Rs. 1,44,60,456/ 1,44,60,456/-.

4. As per ITR Schedule 4. As per ITR Schedule -CFL ITR A.Y. 2019-20 you have shown 20 you have shown carried forward losses of Rs. 53,86,79,186/ carried forward losses of Rs. 53,86,79,186/- (long term capital ong term capital loss) whereas you have shown in ITR for the A.Y. 2015 loss) whereas you have shown in ITR for the A.Y. 2015 loss) whereas you have shown in ITR for the A.Y. 2015-16 in computation of total income Part computation of total income Part-B, it is losses carried forward is B, it is losses carried forward is Rs. 53,86,79,186/ Rs. 53,86,79,186/- and no set off of losses during the year. and no set off of losses during the year.

5. As per ITR Schedule 5. As per ITR Schedule-CFL (ITR-2019-20) you have shown carried shown carried forward losses of Rs. 3,27,30,79,767/ forward losses of Rs. 3,27,30,79,767/- whereas you have shown whereas you have shown in ITR for the A.Y. 2016 in ITR for the A.Y. 2016-17 in computation of total income, part 17 in computation of total income, part-B it is Rs. 3,27,30,79,767/ is Rs. 3,27,30,79,767/- after setoff of losses Rs. 2,86,34,759/ after setoff of losses Rs. 2,86,34,759/-.

6. As per ITR Schedule 6. As per ITR Schedule -CFL ITR-2019-20 you have shown carried have shown carried forward loss of Rs.2,84,72,69,524/ forward loss of Rs.2,84,72,69,524/- where as you have shown in where as you have shown in ITR for the A.Y. 2017 ITR for the A.Y. 2017-18 in computation of total income, Part 18 in computation of total income, Part-B, it is Rs. 2,84,72,69,524/ is Rs. 2,84,72,69,524/- after setoff losses of Rs. 1,63,93,113/ after setoff losses of Rs. 1,63,93,113/-.

7. As per ITR Schedule 7. As per ITR Schedule-CFL ITR -2019-20, you have shown carried you have shown carried forward losses of Rs. 63,45,24,113/ forward losses of Rs. 63,45,24,113/- whereas you have shown in whereas you have shown in ITR for the A.Y. 2018 ITR for the A.Y. 2018-19 in computation of total income part 19 in computation of total income part-B it is Rs. 63,45,24,113/ Rs. 63,45,24,113/- after setoff of losses Rs. 119148725/ after setoff of losses Rs. 119148725/- in many years setoff of losses have been t years setoff of losses have been taken by you but non reduce this aken by you but non reduce this amount and show carried forward and set off losses of Rs. amount and show carried forward and set off losses of Rs. amount and show carried forward and set off losses of Rs. 7,39,70,30,887/ 7,39,70,30,887/- upto assessment year 2018-19 and losses for 19 and losses for A.Υ. 2019-20 shown Rs. 2,82,64,81,723/ 20 shown Rs. 2,82,64,81,723/- in CFL. However, no in CFL. However, no loss shown in computation of ITR 2019 loss shown in computation of ITR 2019-20. Please explain and ase explain and provide calculation provide calculation accordingly.” 5.5 In response to above query, the assessee file response to above query, the assessee file response to above query, the assessee filed a detailed submission on the claim of the depreciation on goodwill, which is submission on the claim of the depreciation on goodwill submission on the claim of the depreciation on goodwill available on paperbook page 42 available on paperbook page 42-44, relevant part of which is 44, relevant part of which is reproduced as under: er:

6. Depreciation under Income 6. Depreciation under Income-tax Act 6.1 Depreciation on assets other than goodwill 6.1 Depreciation on assets other than goodwill The documentary evidence/ proof of additions to fixed assets have The documentary evidence/ proof of additions to fixed assets have The documentary evidence/ proof of additions to fixed assets have been furnished on sample basis as Annexure 7 to the submission been furnished on sample basis as Annexure 7 to the submission been furnished on sample basis as Annexure 7 to the submission dated 27 September 2021. Copy of the dated 27 September 2021. Copy of the same is reattached as same is reattached as Annexure 2 for ready reference. Annexure 2 for ready reference. 6.2 Depreciation on goodwill 6.2 Depreciation on goodwill For AY 2019 For AY 2019-20, the assessee has claimed depreciation of Rs. 20, the assessee has claimed depreciation of Rs. 1,87,76,67,587 on consideration paid for acquisition of various 1,87,76,67,587 on consideration paid for acquisition of various 1,87,76,67,587 on consideration paid for acquisition of various intangible assets reflected as "goodwill" in the intangible assets reflected as "goodwill" in the books of the books of the assessee. The break assessee. The break-up of depreciation on goodwill claimed by the depreciation on goodwill claimed by the assessee is as as under: Particulars Amount (Rs.) Remarks 85,655 Refer note A Depreciation on goodwill resulting on account of acquisition of Studio 18 Depreciation on goodwill resulting on account of acquisition of Studio 18 (a division of Network 18 Media & Investments (a division of Network 18 Media & Investments Pvt. Ltd.) in AY 2008- 09 1,87,75,81,932 1,87,75,81,932 Refer note B Depreciation on goodwill resulting on account of amalgamation of Prism Depreciation on goodwill resulting on account of amalgamation of Prism TV Pvt. Ltd. (‘Prism TV’) into Viacom 18 in AY 2016 TV Pvt. Ltd. (‘Prism TV’) into Viacom 18 in AY 2016-17 1,87,76,67,587 1,87,76,67,587 Total

Note A In AY 2008-09, the Company had acquired the Studio 18 division 09, the Company had acquired the Studio 18 division 09, the Company had acquired the Studio 18 division of Network 18 Media & Investments Private Limited (formerly of Network 18 Media & Investments Private Limited (formerly of Network 18 Media & Investments Private Limited (formerly Network 18 Fincap Limited) under the Business Transfer Network 18 Fincap Limited) under the Business Transfer Network 18 Fincap Limited) under the Business Transfer Agreement dated 11 September 2007 on a going concern basis. As Agreement dated 11 September 2007 on a going concern basis. As Agreement dated 11 September 2007 on a going concern basis. As per the said ag per the said agreement, the Company has paid a consideration of reement, the Company has paid a consideration of Rs 4,13,53,652 for the Net Current Assets aggregating to Rs Rs 4,13,53,652 for the Net Current Assets aggregating to Rs Rs 4,13,53,652 for the Net Current Assets aggregating to Rs 3,44,00,309 and Rs 69,53,343 (reflected as goodwill in the books 3,44,00,309 and Rs 69,53,343 (reflected as goodwill in the books 3,44,00,309 and Rs 69,53,343 (reflected as goodwill in the books of the Company) was paid towards various rights acquired under of the Company) was paid towards various rights acquired under of the Company) was paid towards various rights acquired under the said agreement the said agreement including the business contracts (distribution, including the business contracts (distribution, sub-distribution, production, etc.) brand name of Studio 18 and the distribution, production, etc.) brand name of Studio 18 and the distribution, production, etc.) brand name of Studio 18 and the related intellectual property rights, right to do business in the related intellectual property rights, right to do business in the related intellectual property rights, right to do business in the name of Studio 18. The Company had claimed depreciation on this name of Studio 18. The Company had claimed depreciation on this name of Studio 18. The Company had claimed depreciation on this at 25% on written down value. The assessee humbly submit that written down value. The assessee humbly submit that written down value. The assessee humbly submit that the issue relating to allowability of depreciation on goodwill the issue relating to allowability of depreciation on goodwill the issue relating to allowability of depreciation on goodwill resulting on account of acquisition of Studio 18 is already decided resulting on account of acquisition of Studio 18 is already decided resulting on account of acquisition of Studio 18 is already decided in favour of the assessee by the Hon'ble Mumbai Tribunal in the in favour of the assessee by the Hon'ble Mumbai Tribunal in the in favour of the assessee by the Hon'ble Mumbai Tribunal in the assessee's own case for AY 2008 s own case for AY 2008-09 (the first year of claim of 09 (the first year of claim of depreciation on such goodwill). A copy of the said order is attached depreciation on such goodwill). A copy of the said order is attached depreciation on such goodwill). A copy of the said order is attached herewith as Annexure 3. Further, we understand that the herewith as Annexure 3. Further, we understand that the herewith as Annexure 3. Further, we understand that the Department has accepted the order of the Hon'ble Mumbai Department has accepted the order of the Hon'ble Mumbai Department has accepted the order of the Hon'ble Mumbai Tribunal and not pref Tribunal and not preferred an appeal before the Hon'ble Bombay erred an appeal before the Hon'ble Bombay High Court. Accordingly, the assessee submits that the aforesaid High Court. Accordingly, the assessee submits that the aforesaid High Court. Accordingly, the assessee submits that the aforesaid issue is now settled and hence deprecation of Rs.85,655/ issue is now settled and hence deprecation of Rs.85,655/ issue is now settled and hence deprecation of Rs.85,655/- should be allowed to the assessee arising on account of acquisition of be allowed to the assessee arising on account of acquisition of be allowed to the assessee arising on account of acquisition of Studio 18. Note B In AY 2016-17, as per the Hon'ble Bombay High Court Order dated 17, as per the Hon'ble Bombay High Court Order dated 17, as per the Hon'ble Bombay High Court Order dated 12 August 2016 Prism TV Private Limited has merged with 12 August 2016 Prism TV Private Limited has merged with 12 August 2016 Prism TV Private Limited has merged with Viacom18 Media Private Limited with effect from 1 April 2015 on a Viacom18 Media Private Limited with effect from 1 April 2015 on a Viacom18 Media Private Limited with effect from 1 April 2015 on a going concern basis. The merger was not a tax neutral merger as going concern basis. The merger was not a tax neutral merger as going concern basis. The merger was not a tax neutral merger as the consideration i.e. shares were issued to the parent company of ideration i.e. shares were issued to the parent company of ideration i.e. shares were issued to the parent company of Prism TV. As per the said High Court order, the Company has paid Prism TV. As per the said High Court order, the Company has paid Prism TV. As per the said High Court order, the Company has paid a consideration of Rs 19,340,040,368 for the acquisition of Prism a consideration of Rs 19,340,040,368 for the acquisition of Prism a consideration of Rs 19,340,040,368 for the acquisition of Prism TV Private Limited by issue of shares at fair value. Out of the sa TV Private Limited by issue of shares at fair value. Out of the sa TV Private Limited by issue of shares at fair value. Out of the said consideration consideration consideration of of of Rs Rs Rs 19,340,040,368, 19,340,040,368, 19,340,040,368, an an an amount amount amount of of of Rs Rs Rs 1780,22,58,316 was paid towards various intangibles (customer 1780,22,58,316 was paid towards various intangibles (customer 1780,22,58,316 was paid towards various intangibles (customer relationship, skilled workforce, business contracts, know relationship, skilled workforce, business contracts, know relationship, skilled workforce, business contracts, know-how, business business business information, information, information, trademarks, trademarks, trademarks, list list list of of of customers, customers, customers, distributors/suppliers, distributors/suppliers, rights, rights, processes, processes, marketing marketing and and distribution strategies, commercial rights, intellectual property distribution strategies, commercial rights, intellectual property distribution strategies, commercial rights, intellectual property rights, licenses, permits, trademarks, copyrights, patents, quotas, rights, licenses, permits, trademarks, copyrights, patents, quotas, rights, licenses, permits, trademarks, copyrights, patents, quotas, approvals, lease, tenancy rights, permissions, incentives, grants approvals, lease, tenancy rights, permissions, incentives, grants approvals, lease, tenancy rights, permissions, incentives, grants and various other righ and various other rights, title, interest, certificates, registrations ts, title, interest, certificates, registrations under various legislations, contracts, agreements, consents) under various legislations, contracts, agreements, consents) under various legislations, contracts, agreements, consents) acquired by the Company (reflected as goodwill in the books) on acquired by the Company (reflected as goodwill in the books) on acquired by the Company (reflected as goodwill in the books) on which depreciation @ 25% was claimed as part of block of which depreciation @ 25% was claimed as part of block of which depreciation @ 25% was claimed as part of block of intangible assets. The as intangible assets. The assessee submits that said goodwill was sessee submits that said goodwill was not recorded in the books of Prism TV and no depreciation was not recorded in the books of Prism TV and no depreciation was not recorded in the books of Prism TV and no depreciation was claimed thereon by Prism TV (i.e. amalgamating company). Thus, claimed thereon by Prism TV (i.e. amalgamating company). Thus, claimed thereon by Prism TV (i.e. amalgamating company). Thus, goodwill, a capital right comprising of various intangible goodwill, a capital right comprising of various intangible goodwill, a capital right comprising of various intangible rights acquired by amalgamated com acquired by amalgamated company, is recorded for the first time pany, is recorded for the first time in the books of Viacom 18 (i.e. amalgamated company). Viacom 18 in the books of Viacom 18 (i.e. amalgamated company). Viacom 18 in the books of Viacom 18 (i.e. amalgamated company). Viacom 18 has acquired such goodwill consisting of various intangibles from has acquired such goodwill consisting of various intangibles from has acquired such goodwill consisting of various intangibles from Prism TV and separately discharged consideration for the same, it Prism TV and separately discharged consideration for the same, it Prism TV and separately discharged consideration for the same, it has recorded the same i has recorded the same in accordance with Accounting Standard n accordance with Accounting Standard - 14 on the basis of fair value determined by independent valuer 14 on the basis of fair value determined by independent valuer 14 on the basis of fair value determined by independent valuer and consequently, claimed depreciation in accordance with and consequently, claimed depreciation in accordance with and consequently, claimed depreciation in accordance with provisions of the Act read with decision of Hon'ble Supreme Court provisions of the Act read with decision of Hon'ble Supreme Court provisions of the Act read with decision of Hon'ble Supreme Court in case of Smifs Securities L in case of Smifs Securities Ltd (24 taxmann.com 222). A copy of td (24 taxmann.com 222). A copy of order of the Hon'ble Bombay High Court dated 12 August 2016 order of the Hon'ble Bombay High Court dated 12 August 2016 order of the Hon'ble Bombay High Court dated 12 August 2016 approving the merger of Prism TV into Viacom 18 with effect from approving the merger of Prism TV into Viacom 18 with effect from approving the merger of Prism TV into Viacom 18 with effect from 1|April 2015 is attached herewith as Annexure 4. 1|April 2015 is attached herewith as Annexure 4. A copy of the valuation report obtained from Er A copy of the valuation report obtained from Ernst & Young nst & Young Merchant Banking Services Pvt. Ltd. dated 2 February 2016 Merchant Banking Services Pvt. Ltd. dated 2 February 2016 Merchant Banking Services Pvt. Ltd. dated 2 February 2016 determining the fair exchange ratio of shares in relation to merger determining the fair exchange ratio of shares in relation to merger determining the fair exchange ratio of shares in relation to merger of Prism TV Pvt. Ltd. into Viacom 18 is attached herewith as of Prism TV Pvt. Ltd. into Viacom 18 is attached herewith as of Prism TV Pvt. Ltd. into Viacom 18 is attached herewith as Annexure 5. Further, we also attach herewith as Annexure Annexure 5. Further, we also attach herewith as Annexure Annexure 5. Further, we also attach herewith as Annexure 6, an extract (as the size is bulky) of copy of report dated 16 September extract (as the size is bulky) of copy of report dated 16 September extract (as the size is bulky) of copy of report dated 16 September 2016 obtained by Viacom 18 from KPMG India Pvt. Ltd. in 2016 obtained by Viacom 18 from KPMG India Pvt. Ltd. in 2016 obtained by Viacom 18 from KPMG India Pvt. Ltd. in connection with purchase price allocation on account of acquisition connection with purchase price allocation on account of acquisition connection with purchase price allocation on account of acquisition of Prism TV as at 1 April 2015. of Prism TV as at 1 April 2015. The assessee humbly submit The assessee humbly submit that the issue relating to allowability that the issue relating to allowability of depreciation on goodwill resulting on account of acquisition of of depreciation on goodwill resulting on account of acquisition of of depreciation on goodwill resulting on account of acquisition of Prism TV is decided in favour of the assessee by the Facelsss Prism TV is decided in favour of the assessee by the Facelsss Prism TV is decided in favour of the assessee by the Facelsss Assessment Unit in the assessee's own case for AY 2018 Assessment Unit in the assessee's own case for AY 2018 Assessment Unit in the assessee's own case for AY 2018-19. A copy of the said order is copy of the said order is attached herewith as Annexure 7. attached herewith as Annexure 7. Accordingly, the assessee submits that the deprecation of Rs. Accordingly, the assessee submits that the deprecation of Rs. Accordingly, the assessee submits that the deprecation of Rs. 1,87,75,81,932/ 1,87,75,81,932/- should be allowed to the assessee arising on should be allowed to the assessee arising on account of acquisition account of acquisition of Prism TV. 5.6 In this submission, the assessee explained depreciation on this submission, the assessee explained depreciation on this submission, the assessee explained depreciation on goodwill comprised of of two items, firstly, depreciation amounting to two items, firstly, depreciation amounting to ₹85,655/-on goodwill resulting on account of acquisition of studio on goodwill resulting on account of acquisition of studio on goodwill resulting on account of acquisition of studio 18 in assessment year 2008 18 in assessment year 2008-09 with a complete note separately. 09 with a complete note separately. Secondly, depreciation amounting to ₹1,87,75,81,932/ Secondly, depreciation amounting to 932/-on goodwill resulting on account of resulting on account of amalgamation of ‘Prism TV Pvt amalgamation of ‘Prism TV Pvt Ltd’ with the assessee in assessment year 2016 assessee in assessment year 2016-17 along with a detailed note. 17 along with a detailed note. Regarding the second item the assessee also enclosed copy of the Regarding the second item the assessee also enclosed copy of the Regarding the second item the assessee also enclosed copy of the order of the Hon’ble Bombay High Court dat order of the Hon’ble Bombay High Court dated 12/08/2016 ed 12/08/2016 approving the merger of Prism TV approving the merger of Prism TV Pvt Ltd into the assessee with into the assessee with effect from 01/04/2015; copy of valuation report obtained from effect from 01/04/2015; copy of valuation report obtained from effect from 01/04/2015; copy of valuation report obtained from Ernst & Young merchant banking services Private Limited dated Ernst & Young merchant banking services Private Limited dated Ernst & Young merchant banking services Private Limited dated 02/02/2016 determining the fair exchange ratio of shares in 02/02/2016 determining the fair exchange ratio of sha 02/02/2016 determining the fair exchange ratio of sha relation to merger and copy of the assessment order for assessment relation to merger and copy of the assessment order for assessment relation to merger and copy of the assessment order for assessment year 2018-19 i.e. immediately prior assessment year, wherein the 19 i.e. immediately prior assessment year, wherein the 19 i.e. immediately prior assessment year, wherein the Assessing Officer allowed the claim of depreciation on goodwill Assessing Officer allowed the claim of depreciation on goodwill Assessing Officer allowed the claim of depreciation on goodwill arising from merger of Prism TV. arising from merger of Prism TV.

5.7 After thorough After thorough examination of the claim of the assessee and examination of the claim of the assessee and keeping in view such depreciation allowed by the Assessing Officer keeping in view such depreciation allowed by the Assessing Officer keeping in view such depreciation allowed by the Assessing Officer in immediately preceding assessment year i.e. AY 2018-19, the in immediately preceding assessment year i.e. AY 2018 in immediately preceding assessment year i.e. AY 2018 Assessing Officer accepted the claim of the assessee with the Assessing Officer accepted the claim of the assessee with the Assessing Officer accepted the claim of the assessee with the following observation in the assessment order: n in the assessment order:

“3. In this case, assessee has claimed substantial depreciation/ In this case, assessee has claimed substantial depreciation/ In this case, assessee has claimed substantial depreciation/ and claimed additional depreciation. For verifying issue and claimed additional depreciation. For verifying issue and claimed additional depreciation. For verifying issue questionnaire and show cause notice issue to assessee as per questionnaire and show cause notice issue to assessee as per questionnaire and show cause notice issue to assessee as per above time line mentioned in above table. Vide above time line mentioned in above table. Vide reply dated reply dated 19.09.2022, assessee company has submitted documentary 19.09.2022, assessee company has submitted documentary 19.09.2022, assessee company has submitted documentary evidence of addition to fixed assets in Annexure evidence of addition to fixed assets in Annexure -2 of its reply 2 of its reply dated 19.09.2022. On examination of reply of the assessee and dated 19.09.2022. On examination of reply of the assessee and dated 19.09.2022. On examination of reply of the assessee and on perusal of Annexure on perusal of Annexure-2, submission of assessee company is 2, submission of assessee company is found considerable and issue of depreciation claimed is ound considerable and issue of depreciation claimed is ound considerable and issue of depreciation claimed is examined and examined and found correct.” 5.8 Similarly on the issue of business on the issue of business losses set off and carry losses set off and carry forward also the Assessing Officer after verification accepted the forward also the Assessing Officer after verification accepted the forward also the Assessing Officer after verification accepted the claim of the assessee observing as under: claim of the assessee observing as under:

The assessee humbly su The assessee humbly submit that the losses shown in form ITR bmit that the losses shown in form ITR 6 for the year under consideration are losses remaining after set 6 for the year under consideration are losses remaining after set 6 for the year under consideration are losses remaining after set of loses claimed in earlier years. The assessee humbly submit of loses claimed in earlier years. The assessee humbly submit of loses claimed in earlier years. The assessee humbly submit that profits of A.Y 2010 that profits of A.Y 2010-11, A.Y. 2011-12 and A.Y. 2015 12 and A.Y. 2015-16 amounting to R.s 3,03,62,15,13 amounting to R.s 3,03,62,15,139/- (refer the break up below) (refer the break up below) were set off against losses of A.Y. 2009 were set off against losses of A.Y. 2009-10, 2012- 13 and and 2013- 14: Assessment year Assessment year Profits/ (loss) for the Profits/ (loss) for the year 2010-11 10,49,98.521/-

2011-12 92.51,51.908/- 2015-16 200,60.64,710/-

Total profits 3,03,62,15,139/-

Less: losses of following years losses of following years set off against above profits set off against above profits 2009-10 (2,39,14,74,491/-)

2012-13 (32,56,80,871) 2013-14 (31,90.59,777) Total losses set off Total losses set off 3.03.62,15,139/-

After setoff of taxable profits the losses remaining for AY 2009 After setoff of taxable profits the losses remaining for AY 2009 After setoff of taxable profits the losses remaining for AY 2009- 10, A.Y. 2012 10, A.Y. 2012-13 and AY 2013- 14 is as under and the same 14 is as under and the same are carried forward to subsequent year: are carried forward to subsequent year: AY Total losses as per Losses set off as Net losses available Net losses available ITR above (B) for carry forward for carry forward (A) (A-B) to subsequent B) to subsequent AY 2009-10 2,39.14.74,491 239,14,74,491 Nil 2012-13 35,86,04,360 32,56,80,871 3,29,23.489 3,29,23.489 2013-14 60,14,50,061 31,90,59,777 28,23,90,284 28,23,90,284 2014-15 32,68,43,712 0 32,68.43,712 32,68.43,712 2015-16 0 0 m 2016-17 327,30,79,767 0 327,30,79,767 327,30,79,767 2017-18 284,72,69,524 0 284,72,69,524 284,72,69,524 2018-19 63,45,24,113 0 63,45,24,113 63,45,24,113

Total losses of earlier 1043,32,46,028 303,62,15,139 739,70,30,887 739,70,30,887 year b/f (A)

Losses of current year ie. Losses of current year ie. 282,64,81,723 0 282,64,81,723 282,64,81,723 2019- 20

Total losses c/f as per 1325,97,27,750 303,62,15,138 1022,35,12,612 1022,35,12,612 ITR

On examination of submission of the On examination of submission of the assessee, reply of the assessee, reply of the assessee is found considerable hence, accepted. assessee is found considerable hence, accepted.” 5.9 In view of the aforesaid discussion, we are of the opinion that view of the aforesaid discussion, we are of the opinion that view of the aforesaid discussion, we are of the opinion that Assessing Officer had had thoroughly examined both the issues of d both the issues of depreciation on the goodwill as well as amount of business loss to depreciation on the goodwill as well as amount of busi depreciation on the goodwill as well as amount of busi be carried forward. It is not necessary for the Assessing Officer to be carried forward. It is not necessary for the Assessing Officer to be carried forward. It is not necessary for the Assessing Officer to mention every reasoning for accepting the view of the assessee and mention every reasoning for accepting the view of the assessee and mention every reasoning for accepting the view of the assessee and such reasoning is required whenever the Assessing Officer is is required whenever the Assessing Officer is is required whenever the Assessing Officer is particularly not accepting the contention of the assessee and particularly not accepting the contention of the assessee and particularly not accepting the contention of the assessee and making additions. This is the normal practice followed by the making additions. This is the normal practice followed by the making additions. This is the normal practice followed by the Assessing Officer in the Income in the Income-tax Department while framing the while framing the assessment order. In assessment order. In the instant assessment order the instant assessment order however the Assessing Officer even made clear that he has allowed the claim of Assessing Officer even made clear that he has allowed the claim of Assessing Officer even made clear that he has allowed the claim of the assessee after due verification of the submissions of the the assessee after due verification of the submissions of the the assessee after due verification of the submissions of the assessee on various queries raised by him. In such facts and assessee on various queries raised by him. In such facts and assessee on various queries raised by him. In such facts and circumstances, we do not we do not have any doubt in our have any doubt in our mind that Assessing Officer had Assessing Officer had carried out the inquiries which he ought to carried out the inquiries which he ought to have carried out in the facts and circumstances of the case. have carried out in the facts and circumstances of the case. have carried out in the facts and circumstances of the case. Accordingly, we reject we reject the contention of the learned Departmental the contention of the learned Departmental Representative that the assess epresentative that the assessment order is deemed to be ment order is deemed to be erroneous insofar as prej erroneous insofar as prejudicial to the interest of the R udicial to the interest of the Revenue invoking Explanation xplanation -2 below section 263 of the Act Act.

5.10 Another argument advanced by the learned departmental Another argument advanced by the learned departmental Another argument advanced by the learned departmental representative is that Assessing Officer has not followed the representative is that Assessing Officer has not fol representative is that Assessing Officer has not fol consistent stand taken by the Department in preceding assessment stand taken by the Department in preceding assessment stand taken by the Department in preceding assessment years 2016-17 and 2017 17 and 2017-18. The assessment year 2016 18. The assessment year 2016-17 being first year of claim of depreciation of the goodwill arising from merger first year of claim of depreciation of the goodwill arising from merger first year of claim of depreciation of the goodwill arising from merger of Prism TV P ltd, the Assessing Officer disallo of Prism TV P ltd, the Assessing Officer disallowed the claim of the wed the claim of the assessee. In assessment year 2017 assessee. In assessment year 2017-18 also such a claim has been 18 also such a claim has been disallowed by the Assessing Officer and assessee is in the appeal on disallowed by the Assessing Officer and assessee is in the appeal on disallowed by the Assessing Officer and assessee is in the appeal on this issue. According to the learned departmental representative, as this issue. According to the learned departmental representative, as this issue. According to the learned departmental representative, as the issue was not accepted by the not accepted by the Department Department, following the principle of consistency and to keep the matter alive, he was principle of consistency and to keep the matter alive, he was principle of consistency and to keep the matter alive, he was mandatorily required to follow the stand of the Department and mandatorily required to follow the stand of the Department and mandatorily required to follow the stand of the Department and disallow such depreciation on the goodwill. According to him this disallow such depreciation on the goodwill. According to him this disallow such depreciation on the goodwill. According to him this action of the Assessing Officer was pr action of the Assessing Officer was prejudicial to the interests of the ejudicial to the interests of the revenue.

bmissions of the parties on the issue on 8. We have heard rival su We have heard rival submissions of the parties on the issue on the merit of the matter. As far as claim of depreciation is concerned the merit of the matter. As far as claim of depreciation is concerned the merit of the matter. As far as claim of depreciation is concerned it comprises of the three parts. Firstly, depreciation on goodwill in it comprises of the three parts. Firstly, depreciation on goodwill in it comprises of the three parts. Firstly, depreciation on goodwill in respect of acquisition of Studio 18 amounting to respect of acquisition of Studio 18 amounting to Rs. Rs.85,655/- is in dispute. Secondly, depreciation on the goodwill in respect of Secondly, depreciation on the goodwill in respect of Secondly, depreciation on the goodwill in respect of amalgamation of Prism TV Ltd. amounting to amalgamation of Prism TV Ltd. amounting to Rs.1,87,75,81,932/ 1,87,75,81,932/- is in dispute. Thirdly, depreciation on Voot Platform is in dispute. is in dispute. Thirdly, depreciation on Voot Platform is in dispute. is in dispute. Thirdly, depreciation on Voot Platform is in dispute. Fourthly, dispute is in respect of verification of carry dispute is in respect of verification of carry dispute is in respect of verification of carry forward of losses to the subsequent assessment years. We take up all these sses to the subsequent assessment years. We take up all these sses to the subsequent assessment years. We take up all these issues one by one.

8.1 Firstly, we take up issue of goodwill in respect of acquisition of Firstly, we take up issue of goodwill in respect of acquisition of Firstly, we take up issue of goodwill in respect of acquisition of Studio 18. Fact qua issue in dispute are that during the financial Studio 18. Fact qua issue in dispute are that during the financial Studio 18. Fact qua issue in dispute are that during the financial year 2007-08 relevant to assessment 08 relevant to assessment year 2008-09, the assessee 09, the assessee had acquired the “Studio 18” division of had acquired the “Studio 18” division of ‘Network 18 Media & Network 18 Media & Investments Pvt. Ltd. Investments Pvt. Ltd.’ on a going concern basis under slump sale. on a going concern basis under slump sale. As per the business transfer agreement, the assessee had acquired As per the business transfer agreement, the assessee had acquired As per the business transfer agreement, the assessee had acquired the net assets at the value of Rs.3, the net assets at the value of Rs.3,44,00,309/- against the total against the total consideration of Rs.4,13,53,652/ consideration of Rs.4,13,53,652/-, thereby recognizing goodwill , thereby recognizing goodwill at Rs.69,55,343/-. The assessee has been claiming depreciation on . The assessee has been claiming depreciation on . The assessee has been claiming depreciation on the said goodwill since assessment year 2008 the said goodwill since assessment year 2008-09. The Co 09. The Co-ordinate Bench of the Tribunal has appro Bench of the Tribunal has approved the claim of the assessee in the ved the claim of the assessee in the first year i.e. assessment year 2008 first year i.e. assessment year 2008-09 itself in its order dated 09 itself in its order dated 29.01.2016 passed passed in in 7446/Mum/2012 and and 265/Mum/2013. The ld The ld. Counsel submitted that t Counsel submitted that the Income-tax Department has also accepted said order and also accepted said order and did not challenge the did not challenge the same before the Hon’ble Bombay High Court. same before the Hon’ble Bombay High Court. This fact has not been This fact has not been disputed by the ld DR. disputed by the ld DR.

8.2 Having considered Having considered above submissions of the parties, we are of of the parties, we are of the opinion that once the Income the opinion that once the Income-tax Department has allowed and tax Department has allowed and accepted the claim of depreciation in the year of capitalization itself, claim of depreciation in the year of capitalization itself, claim of depreciation in the year of capitalization itself, the Department cannot alter the position in subsequent years the Department cannot alter the position in subsequent years the Department cannot alter the position in subsequent years without any material change in facts and legal position in view of without any material change in facts and legal position in view of without any material change in facts and legal position in view of principle of consistency held by the Hon’ble Supreme Court principle of consistency held by the Hon’ble Supreme Court principle of consistency held by the Hon’ble Supreme Court Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC). i Satsang v. CIT [1992] 193 ITR 321 (SC). There is no i Satsang v. CIT [1992] 193 ITR 321 (SC). error on the part of the Assessing officer on accepting tye claim of error on the part of the Assessing officer on accepting tye claim of error on the part of the Assessing officer on accepting tye claim of the assessee on this issue. the assessee on this issue. In view of above, the Ld. PCIT In view of above, the Ld. PCIT is not justified in holding the order of the Assessing Officer as erroneous justified in holding the order of the Assessing Officer as erroneou justified in holding the order of the Assessing Officer as erroneou in so far as depreciation on the goodwill on acquisition of the Studio in so far as depreciation on the goodwill on acquisition of the Studio in so far as depreciation on the goodwill on acquisition of the Studio 18 is concerned.

8.3 The next ground on merit relates to depreciation on the The next ground on merit relates to depreciation on the The next ground on merit relates to depreciation on the goodwill in respect of amalgamation of Prism TV. goodwill in respect of amalgamation of Prism TV. The material facts The material facts are not in dispute. The assessee amalgamated Prism TV Pvt. Ltd. are not in dispute. The assessee amalgamated Prism TV Pvt. Ltd. are not in dispute. The assessee amalgamated Prism TV Pvt. Ltd. with effect from 01.04.2015 on a going concern basis pursuant to a with effect from 01.04.2015 on a going concern basis pursuant to a with effect from 01.04.2015 on a going concern basis pursuant to a scheme duly sanctioned by the Hon’ble Bombay High Court by scheme duly sanctioned by the Hon’ble Bombay High Court by scheme duly sanctioned by the Hon’ble Bombay High Court by order dated 12.08.2016. The amalgamation was accounted for in order dated 12.08.2016. The amalgamation was ac order dated 12.08.2016. The amalgamation was ac the financial statements for the year ended 31.03.2016, wherein the the financial statements for the year ended 31.03.2016, wherein the the financial statements for the year ended 31.03.2016, wherein the assessee disclosed, in full transparency, the net assets acquired, assessee disclosed, in full transparency, the net assets acquired, assessee disclosed, in full transparency, the net assets acquired, the consideration paid, and the resultant goodwill arising as the the consideration paid, and the resultant goodwill arising as the the consideration paid, and the resultant goodwill arising as the excess of consideration over the net boo excess of consideration over the net book value of the assets and k value of the assets and liabilities taken over. It is further an admitted position that the liabilities taken over. It is further an admitted position that the liabilities taken over. It is further an admitted position that the amalgamating company, Prism TV Pvt. Ltd., did not have any amalgamating company, Prism TV Pvt. Ltd., did not have any amalgamating company, Prism TV Pvt. Ltd., did not have any goodwill recorded in its books, nor had it claimed any depreciation goodwill recorded in its books, nor had it claimed any depreciation goodwill recorded in its books, nor had it claimed any depreciation thereon at any time. This fact stan thereon at any time. This fact stands acknowledged by the ds acknowledged by the Assessing Officer himself in the assessment order for A.Y. 2016-17. Assessing Officer himself in the assessment order for A.Y. 2016 Assessing Officer himself in the assessment order for A.Y. 2016 8.4 In assessment year 2016 In assessment year 2016-17, The Assessing Officer, however, 17, The Assessing Officer, however, disallowed depreciation on such goodwill by invoking the sixth disallowed depreciation on such goodwill by invoking the sixth disallowed depreciation on such goodwill by invoking the sixth proviso to section 32(1) of the Act, o proviso to section 32(1) of the Act, on the premise that depreciation n the premise that depreciation in the hands of the amalgamated company cannot exceed what in the hands of the amalgamated company cannot exceed what in the hands of the amalgamated company cannot exceed what would have been allowable to the amalgamating company had the would have been allowable to the amalgamating company had the would have been allowable to the amalgamating company had the amalgamation not taken place. amalgamation not taken place.

8.5 The assessee contended, that the sixth proviso was enacted contended, that the sixth proviso was enacted contended, that the sixth proviso was enacted only to mitigate situations where both the amalgamating and itigate situations where both the amalgamating and itigate situations where both the amalgamating and amalgamated entities could simultaneously claim depreciation on amalgamated entities could simultaneously claim depreciation on amalgamated entities could simultaneously claim depreciation on the same asset—resulting in an unintended duplication. The resulting in an unintended duplication. The resulting in an unintended duplication. The mischief sought to be avoided was the possibility of depreciation mischief sought to be avoided was the possibility of depreciation mischief sought to be avoided was the possibility of depreciation exceeding 100% (or 150% in practical scenarios involving mid or 150% in practical scenarios involving mid or 150% in practical scenarios involving mid-year amalgamation). Significantly, the proviso was introduced even amalgamation). Significantly, the proviso was introduced even amalgamation). Significantly, the proviso was introduced even before intangible assets, including goodwill, came to be recognised before intangible assets, including goodwill, came to be recognised before intangible assets, including goodwill, came to be recognised as depreciable assets under section 32(1)(ii). Thus, the legislative as depreciable assets under section 32(1)(ii). Thus, the legislative as depreciable assets under section 32(1)(ii). Thus, the legislative intent behind the proviso cannot be stretched to deny depreciation behind the proviso cannot be stretched to deny depreciation behind the proviso cannot be stretched to deny depreciation on goodwill that did not exist in the books of the amalgamating on goodwill that did not exist in the books of the amalgamating on goodwill that did not exist in the books of the amalgamating company and came into existence solely company and came into existence solely as a result of company and came into existence solely as a as a result of result of amalgamation in the hands of the amalgamated company. amalgamation in the hands of the amalgamated company. amalgamation in the hands of the amalgamated company.

8.6 The assessee further The assessee further contended that besides, the sixth proviso esides, the sixth proviso was inserted into the statute even before the intangible assets were the statute even before the intangible assets were the statute even before the intangible assets were included as depreciable asset included as depreciable asset u/s 32(1) of the Act and therefore, u/s 32(1) of the Act and therefore, According to the assessee sixth proviso was not intended to deny According to the assessee sixth proviso was not intended to deny According to the assessee sixth proviso was not intended to deny depreciation on goodwill arising on amalgamation. on goodwill arising on amalgamation.

8.7 The learned counsel for the assessee has placed reliance on The learned counsel for the assessee has placed reliance on The learned counsel for the assessee has placed reliance on the decision of the Mumbai Tribunal in the decision of the Mumbai Tribunal in Dow Chemical International Dow Chemical International (P.) Ltd. vs. DCIT [2024] 169 taxmann.com 290 (Mum.), wherein [2024] 169 taxmann.com 290 (Mum.), wherein [2024] 169 taxmann.com 290 (Mum.), wherein depreciation on goodwill arising upon amalgamation was held depreciation on goodwill arising upon amalgamation was held depreciation on goodwill arising upon amalgamation was held allowable notwithstanding the sixth proviso, on the very ground allowable notwithstanding the sixth proviso, on the very ground allowable notwithstanding the sixth proviso, on the very ground that the amalgamating entity did not possess or claim depreciation that the amalgamating entity did not possess or claim depreciation that the amalgamating entity did not possess or claim depreciation on such goodwill. The on such goodwill. The ITAT allowed depreciation on Goodwill in the ITAT allowed depreciation on Goodwill in the books of amalgamated company by holding that since the books of amalgamated company by holding that since the books of amalgamated company by holding that since the amalgamating company did not have any goodwill recorded in its amalgamating company did not have any goodwill recorded in its amalgamating company did not have any goodwill recorded in its books of accounts or as part of a block of depreciable assets, prior books of accounts or as part of a block of depreciable assets, prior books of accounts or as part of a block of depreciable assets, prior to amalgamation, theref to amalgamation, therefore the question of claim of depreciation on ore the question of claim of depreciation on goodwill by the amalgamating company does not arise in the instant goodwill by the amalgamating company does not arise in the instant goodwill by the amalgamating company does not arise in the instant case. Accordingly, it was held that the provisions of the sixth case. Accordingly, it was held that the provisions of the sixth case. Accordingly, it was held that the provisions of the sixth proviso to section 32(1) of the Act are not applicable to the facts of proviso to section 32(1) of the Act are not applicable to the facts of proviso to section 32(1) of the Act are not applicable to the facts of the present case since the goodwill did not exist in the books of the nt case since the goodwill did not exist in the books of the nt case since the goodwill did not exist in the books of the amalgamating company but has arisen in the process of amalgamating company but has arisen in the process of amalgamating company but has arisen in the process of amalgamation. The parallel with the present case is complete; the amalgamation. The parallel with the present case is complete; the amalgamation. The parallel with the present case is complete; the ratio squarely applies. ratio squarely applies.

Moreover, reliance was placed on the decision of the Hon’ble 8.8 Moreover, reliance was placed on the decision Moreover, reliance was placed on the decision Supreme Court in CIT vs. Smifs Securities Ltd. CIT vs. Smifs Securities Ltd. [2012] 348 ITR 302 [2012] 348 ITR 302 (SC), holding that goodwill constitutes a “business or commercial (SC), holding that goodwill constitutes a “business or commercial (SC), holding that goodwill constitutes a “business or commercial right of similar nature” eligible for depreciation under section right of similar nature” eligible for depreciation under section right of similar nature” eligible for depreciation under section 32(1)(ii). 32(1)(ii). This This principle principle has has been been consistently consiste ntly followed followed in in subsequent subsequent decisions, decisions, including including Ltd. Padmini Padmini Products Products (P.) (P.) Ltd. (Karnataka HC), Thermo Fisher Scientific India (P.) Ltd. Thermo Fisher Scientific India (P.) Ltd. (ITAT Thermo Fisher Scientific India (P.) Ltd. Mumbai), Urmin Marketing (P.) Ltd. Urmin Marketing (P.) Ltd. (ITAT Ahmedabad), and even in (ITAT Ahmedabad), and even in the assessee’s own case for A.Y. 2008 the assessee’s own case for A.Y. 2008-09 relating to depreciation on goodwill arising from the acquisition of Studio18. goodwill arising from the acquisition of Studio18.

8.9 Further, the Ld. counsel for the assessee submitted that Further, the Ld. counsel for the assessee submitted that Further, the Ld. counsel for the assessee submitted that moreover, in view of amendments brought in by the Finance Act, moreover, in view of amendments brought in by the Finance Act, moreover, in view of amendments brought in by the Finance Act, 2021, curtailing depreciation on Goodwill w.e.f. 1.4.2021, made it 2021, curtailing depreciation on Goodwill w.e.f. 1.4.2021, made 2021, curtailing depreciation on Goodwill w.e.f. 1.4.2021, made clear that depreciation on goodwill was allowable upto AY 2020-21. clear that depreciation on goodwill was allowable upto AY 2020 clear that depreciation on goodwill was allowable upto AY 2020 Hon'ble Bangalore ITAT in case of I & B Seeds (P.) Ltd. Hon'ble Bangalore ITAT in case of I & B Seeds (P.) Ltd. Hon'ble Bangalore ITAT in case of I & B Seeds (P.) Ltd. v. DCIT [2022] 142 taxmann.com 274 observed that the intention of 142 taxmann.com 274 observed that the intention of 142 taxmann.com 274 observed that the intention of the Legislature is that depreciation on goodwill is allowable prior to the Legislature is that depreciation on goodwill is allowable p the Legislature is that depreciation on goodwill is allowable p the said amendments, is manifest from the adjustment mechanism. the said amendments, is manifest from the adjustment mechanism. the said amendments, is manifest from the adjustment mechanism. If the legislative intention was to deny depreciation for the past If the legislative intention was to deny depreciation for the past If the legislative intention was to deny depreciation for the past years as well, then there was no need for any adjustment to the cost years as well, then there was no need for any adjustment to the cost years as well, then there was no need for any adjustment to the cost of acquisition of the goodwill. goodwill.

9.1 Subsequently, depreciation of the goodwill generated as a Subsequently, depreciation of the goodwill generated as a Subsequently, depreciation of the goodwill generated as a result of amalgamation came up before the Co result of amalgamation came up before the Co-ordinate Bench of ordinate Bench of the Bengaluru Tribunal in the case of United Bravery Ltd. v. Addl. the Bengaluru Tribunal in the case of United Bravery Ltd. v. Addl. the Bengaluru Tribunal in the case of United Bravery Ltd. v. Addl. CIT TS-553-ITAT-2016 (Bang.). In 2016 (Bang.). In this case, in the previsous year this case, in the previsous year relevant to assessment year 2007 relevant to assessment year 2007-08 a wholly owned subsidiary of 08 a wholly owned subsidiary of assessee namely Karnataka Bereweries and Distilary Ltd. (KBDL) assessee namely Karnataka Bereweries and Distilary Ltd. (KBDL) assessee namely Karnataka Bereweries and Distilary Ltd. (KBDL) got amalgamated as peer the order of the Hon’ble High Court. The got amalgamated as peer the order of the Hon’ble High Court. The got amalgamated as peer the order of the Hon’ble High Court. The goodwill amounting to Rs.62.3 goodwill amounting to Rs.62.30 crores was shown as arising as a 0 crores was shown as arising as a result of amalgamation, being the access of purchase consideration result of amalgamation, being the access of purchase consideration result of amalgamation, being the access of purchase consideration paid over the fair value of the tangible assets and other net current paid over the fair value of the tangible assets and other net current paid over the fair value of the tangible assets and other net current assets received from the amalgamating company and depreciation assets received from the amalgamating company and depreciation assets received from the amalgamating company and depreciation of Rs.15.57 crores wa of Rs.15.57 crores was claimed by the assessee. The Tribunal held s claimed by the assessee. The Tribunal held that by virtue of Sixth Proviso (earlier Fifth Proviso) to section 32(1) that by virtue of Sixth Proviso (earlier Fifth Proviso) to section 32(1) that by virtue of Sixth Proviso (earlier Fifth Proviso) to section 32(1) (ii) of the Act, the depreciation in the hands of amalgamated (ii) of the Act, the depreciation in the hands of amalgamated (ii) of the Act, the depreciation in the hands of amalgamated company was allowable only to the extent that was otherwise company was allowable only to the extent that was otherwise company was allowable only to the extent that was otherwise allowable if such succession or amalgamation had not taken place, h succession or amalgamation had not taken place, h succession or amalgamation had not taken place, therefore, the assessee being amalgamated company could not therefore, the assessee being amalgamated company could not therefore, the assessee being amalgamated company could not claim or be allowed depreciation on the assets acquired in the claim or be allowed depreciation on the assets acquired in the claim or be allowed depreciation on the assets acquired in the scheme of amalgamation of an amount more than the depreciation scheme of amalgamation of an amount more than the depreciation scheme of amalgamation of an amount more than the depreciation which was allowable which was allowable to the amalgamating company. The Tribunal to the amalgamating company. The Tribunal noted that ruling of the Hon’ble Supreme Court in the case of Smif noted that ruling of the Hon’ble Supreme Court in the case of Smif noted that ruling of the Hon’ble Supreme Court in the case of Smif Securities Ltd. (supra) was only on the point whether the goodwill Securities Ltd. (supra) was only on the point whether the goodwill Securities Ltd. (supra) was only on the point whether the goodwill fall in the category of intangible assets and the said judgement fall in the category of intangible assets and the said judgement fall in the category of intangible assets and the said judgement would not override the provisions of the said proviso to section ide the provisions of the said proviso to section ide the provisions of the said proviso to section 32(1)(ii), which restricted the claim of depreciation in the cases 32(1)(ii), which restricted the claim of depreciation in the cases 32(1)(ii), which restricted the claim of depreciation in the cases specified there under. under.

9.2 Subsequently, identical issue came before the Co Subsequently, identical issue came before the Co Subsequently, identical issue came before the Co-ordinate Bench of Hyderabad Tribunal in the case of Mylan Laboratories Ltd. Bench of Hyderabad Tribunal in the case of Mylan Lab Bench of Hyderabad Tribunal in the case of Mylan Lab v. DCIT TS-691-ITAT ITAT-2019 (Hyd). In the case the assessee following 2019 (Hyd). In the case the assessee following the principle of purchase method of accounting, considered the the principle of purchase method of accounting, considered the the principle of purchase method of accounting, considered the difference between the amount of investment in the fair market difference between the amount of investment in the fair market difference between the amount of investment in the fair market value of net assets as goodwill arising of amalgamation. The value of net assets as goodwill arising of amalg value of net assets as goodwill arising of amalg Assessing Officer disallowed the depreciation on goodwill relying Assessing Officer disallowed the depreciation on goodwill relying Assessing Officer disallowed the depreciation on goodwill relying upon the decision of the Bengalurur Bench of the Tribunal in the upon the decision of the Bengalurur Bench of the Tribunal in the upon the decision of the Bengalurur Bench of the Tribunal in the case of United Breweries Ltd. (supra). The Co case of United Breweries Ltd. (supra). The Co-ordinate Bench of the ordinate Bench of the Tribunal after considering the arguments of Tribunal after considering the arguments of the both parties held the both parties held that deduction of depreciation on goodwill could not be denied that deduction of depreciation on goodwill could not be denied that deduction of depreciation on goodwill could not be denied invoking Sixth Proviso (earlier Fifth Proviso) excepting the plea of invoking Sixth Proviso (earlier Fifth Proviso) excepting the plea of invoking Sixth Proviso (earlier Fifth Proviso) excepting the plea of the assessee that the Sixth Proviso to section 32(1)(ii) was only a the assessee that the Sixth Proviso to section 32(1)(ii) was only the assessee that the Sixth Proviso to section 32(1)(ii) was only mechanism of allocation of the dep cation of the depreciation otherwise allowable on reciation otherwise allowable on written down value of assets owned by the amalgamating company, written down value of assets owned by the amalgamating company, written down value of assets owned by the amalgamating company, whereby such depreciation got allocated between the amalgamating whereby such depreciation got allocated between the amalgamating whereby such depreciation got allocated between the amalgamating and amalgamated company in the year of amalgamation and had and amalgamated company in the year of amalgamation and had and amalgamated company in the year of amalgamation and had no applicability for any new asse no applicability for any new asset arising on account of t arising on account of amalgamation in the hands of the amalgamated company. The amalgamation in the hands of the amalgamated company. The amalgamation in the hands of the amalgamated company. The Tribunal referred to accounting principles laid down in AS-14 and Tribunal referred to accounting principles laid down in AS Tribunal referred to accounting principles laid down in AS observed that in case of amalgamation in the nature of purchase observed that in case of amalgamation in the nature of purchase observed that in case of amalgamation in the nature of purchase the consideration paid in access of the net the consideration paid in access of the net value of assets and value of assets and liabilities of the amalgamating company was to be treated as of the amalgamating company was to be treated as of the amalgamating company was to be treated as goodwill and such goodwill was held to be eligible for depreciation goodwill and such goodwill was held to be eligible for depreciation goodwill and such goodwill was held to be eligible for depreciation u/s 32(1) by relying upon the decision of the Hon’ble Supreme u/s 32(1) by relying upon the decision of the Hon’ble Supreme u/s 32(1) by relying upon the decision of the Hon’ble Supreme Court in the case of Smif Securities Ltd. (supra). Court in the case of Smif Securities Ltd. (supra).

9.3 In view of the above In view of the above discussion we note existence of two discussion we note existence of two strands of Tribunal jurisprudence prior to the Finance Act, 2021— strands of Tribunal jurisprudence prior to the Finance Act, 2021 strands of Tribunal jurisprudence prior to the Finance Act, 2021 one taking the restrictive view [e.g., one taking the restrictive view [e.g., United Breweries Ltd. United Breweries Ltd., Bangalore Tribunal (supra)] and another adopting the broader Bangalore Tribunal (supra)] and another adopting the broader Bangalore Tribunal (supra)] and another adopting the broader interpretation interpretation consistent consistent with with Smifs Smifs Securities Securities [e.g., Mylan Laboratories Ltd., Hyderabad Tribunal)]. The Assessing Officer in , Hyderabad Tribunal)]. The Assessing Officer in , Hyderabad Tribunal)]. The Assessing Officer in the present case followed the latter view, which is a possible and the present case followed the latter view, which is a possible and the present case followed the latter view, which is a possible and reasonable interpretation borne out of binding Supreme Court reasonable interpretation borne out of binding Supreme Court reasonable interpretation borne out of binding Supreme Court authority and consistent Tribun authority and consistent Tribunal decisions. It is trite law that al decisions. It is trite law that where two views are possible, and the Assessing Officer has adopted where two views are possible, and the Assessing Officer has adopted where two views are possible, and the Assessing Officer has adopted one which is not contrary to law, the same cannot be substituted in one which is not contrary to law, the same cannot be substituted in one which is not contrary to law, the same cannot be substituted in revision merely because another view is also feasible. The learned revision merely because another view is also feasible. The learned revision merely because another view is also feasible. The learned PCIT was, therefore, not justified in disturbing the plausible view e, not justified in disturbing the plausible view e, not justified in disturbing the plausible view adopted by the Assessing Officer. adopted by the Assessing Officer.

9.4 In view of the above discussion, and applying the binding ratio In view of the above discussion, and applying the binding ratio In view of the above discussion, and applying the binding ratio of the Hon’ble Supreme Court in of the Hon’ble Supreme Court in Smifs Securities Ltd Smifs Securities Ltd (supra). as well as the consistent line of authorit as the consistent line of authority supporting the allowability of y supporting the allowability of depreciation on goodwill arising upon amalgamation where no such depreciation on goodwill arising upon amalgamation where no such depreciation on goodwill arising upon amalgamation where no such goodwill existed in the books of the amalgamating company, we goodwill existed in the books of the amalgamating company, we goodwill existed in the books of the amalgamating company, we hold that the sixth proviso to section 32(1) has no application to the hold that the sixth proviso to section 32(1) has no application to the hold that the sixth proviso to section 32(1) has no application to the present case. The goodwil present case. The goodwill in question is a new intangible asset that l in question is a new intangible asset that came into existence only upon amalgamation and qualifies for came into existence only upon amalgamation and qualifies for came into existence only upon amalgamation and qualifies for depreciation under section 32(1)(ii). The Assessing Officer has, in depreciation under section 32(1)(ii). The Assessing Officer has, in depreciation under section 32(1)(ii). The Assessing Officer has, in our view, correctly appreciated the legal position and allowed our view, correctly appreciated the legal position and allowed our view, correctly appreciated the legal position and allowed depreciation accordingly. ingly.

9.5 Further, an amendment brought by the Finance Act, 2021 an amendment brought by the Finance Act, 2021 an amendment brought by the Finance Act, 2021 curtailing depreciation of goodwill is curtailing depreciation of goodwill is prospective and does not apply prospective and does not apply in the year under consideration. Thus the Assessing Officer has in the year under consideration. Thus the Assessing Officer has in the year under consideration. Thus the Assessing Officer has allowed the depreciation of the goodwill consciously and following allowed the depreciation of the goodwill consciously a allowed the depreciation of the goodwill consciously a the settled legal position. the settled legal position. We find no infirmity in the order of the We find no infirmity in the order of the Assessing Officer. The action of the PCIT in seeking to substitute Assessing Officer. The action of the PCIT in seeking to substitute Assessing Officer. The action of the PCIT in seeking to substitute his own interpretation for a legally tenable view adopted by the his own interpretation for a legally tenable view adopted by the his own interpretation for a legally tenable view adopted by the Assessing Officer is unsustainable. The as Assessing Officer is unsustainable. The assessee succeeds on this sessee succeeds on this ground

“Whether the loss of profits or gains in any year may be “Whether the loss of profits or gains in any year may b “Whether the loss of profits or gains in any year may b carried forward to the following year and set off against carried forward to the following year and set off against carried forward to the following year and set off against the profits and gains of the same business, profession or the profits and gains of the same business, profession or the profits and gains of the same business, profession or vocation under section 24(2) has to be determined by the vocation under section 24(2) has to be determined by the vocation under section 24(2) has to be determined by the ITO who deals with the assessment of the subsequent ITO who deals with the assessment of the subsequent ITO who deals with the assessment of the subsequent year. It is for the ITO deali year. It is for the ITO dealing with the assessment in the ng with the assessment in the subsequent year to determine whether the loss of the subsequent year to determine whether the loss of the subsequent year to determine whether the loss of the previous year may be set off against the profits of that previous year may be set off against the profits of that previous year may be set off against the profits of that year. A decision recorded by the ITO who computes the year. A decision recorded by the ITO who computes the year. A decision recorded by the ITO who computes the loss in the previous year under section 24(3) that the loss loss in the previous year under section 24(3) that the loss loss in the previous year under section 24(3) that the loss cannot be set off against the income of the subsequent nnot be set off against the income of the subsequent nnot be set off against the income of the subsequent year is not binding on the assessee". year is not binding on the assessee".

Following the above decision, Following the above decision, The coordinate Bench of ITAT The coordinate Bench of ITAT Mumbai, in case of Cargo Service Centre India (P) Ltd V. Mumbai, in case of Cargo Service Centre India (P) Ltd V. Mumbai, in case of Cargo Service Centre India (P) Ltd V. DCIT [2021] had also quas 3612/Mum/2119, had also quashed revision u/s. 263 denying the carry forward of losses to subsequent year u/s. 263 denying the carry forward of losses to subsequent year u/s. 263 denying the carry forward of losses to subsequent year holding that the observations about the eligibility of loss being observations about the eligibility of loss being observations about the eligibility of loss being carried forward do not affect the interests of not affect the interests of the assessee. assessee.