Jio Platforms Limited Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, decided cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), for Assessment Year 2021-22. The Revenue challenged the deletion of additions relating to depreciation on intangible assets and revenue received in advance, while the assessee challenged the disallowance of interest expenditure under Section 36(1)(iii) of the Income-tax Act.
Revenue’s Appeal – Depreciation on Intangible Assets
The assessee had acquired platform business undertakings and a FinTech platform from group companies through slump sale transactions during FY 2019-20. The acquired assets included intangible assets which had already been added to the block of assets in Assessment Year 2020-21. During that year, the Assessing Officer had examined the slump sale agreements and accepted the depreciation claim under Section 143(3). In the year under consideration, the assessee claimed depreciation of Rs. 2,761.60 crore, substantially on the opening written down value (WDV) carried forward from the preceding year.
The Assessing Officer disallowed the depreciation, alleging that the multiple mergers, demergers, slump sale transactions, valuation of intangible assets, and related claims constituted a colourable device to minimise tax liability. The Assessing Officer also questioned whether the intangible assets merely represented accumulated operational expenditure such as salaries and professional fees and doubted the genuineness of the transactions.
