Compensatory Interest, Section 80G CSR Deduction and Workforce Depreciation Allowable: Delhi ITAT

By RATHI Income Tax Judiciary July 7, 2026

TaxGuru Citation: 2026 taxguru.in 7870
Case Name: T.V. Today Network Limited Vs ACIT (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2018-19
Courts: All ITAT, ITAT Delhi

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T.V. Today Network Limited Vs ACIT (ITAT Delhi)

Deduction was allowable on compensatory interest, zero-exempt-income u/s 14A disallowance, 80G CSR deductions, and workforce depreciation

Conclusion: Interest on delayed payment of the FM radio migration fee was a compensatory business expenditure deductible under Section 37(1); no disallowance under Section 14A could be made in the absence of exempt income; CSR contributions made to an approved institution remained eligible for deduction under Section 80G notwithstanding the disallowance under Section 37(1); and depreciation was allowable on the acquired workforce as an intangible asset constituting a business or commercial right under Section 32(1).

]Held: Assessee, a broadcasting company, paid a migration fee and delayed-payment interest to the Ministry of Information & Broadcasting to transition its FM radio stations to Phase-III while keeping them continuously operational. The migration fee was capitalized, while the interest was claimed as a revenue expense. Assessee held investments worth ₹6,771 lakhs but earned zero exempt income during the year. AO applied Section 14A and Rule 8D to make a disallowance. Assessee incurred a CSR expenditure of ₹2.84 crores. It voluntarily disallowed this sum under Section 37(1) but claimed a 50% deduction (₹1.42 crores) under Section 80G for payments made to an 80G-approved entity, the Care Today Fund. Assessee acquired a digital business via a slump sale for ₹20 crores, capitalizing ₹6.10 crores as an intangible asset (workforce) based on a valuation report. It claimed depreciation of ₹1.52 crores. AO disallowed it, stating a workforce was not akin to traditional intellectual property or licenses. It was held that interest paid on the delayed migration fee was compensatory in nature and directly tied to continuous business operations, making it fully allowable as a revenue expenditure. Since assessee did not earn any exempt income from its investments during the year, no disallowance under Section 14A read with Rule 8D can legally be sustained. There was no restriction in the Act preventing an assessee from claiming a Section 80G deduction on CSR expenditures, provided the recipient entity holds a valid Section 80G registration. A transferred workforce functions as a tool of trade that facilitated smooth business operations. It fell under the definition of “business or commercial rights of a similar nature” under Section 32(1), rendering it eligible for depreciation. Interest levied on delayed regulatory or statutory fees was compensatory rather than penal, allowing it to be deducted as a regular business expense under Section 37(1).