Relief to Star India: ITAT directs AO to delete the Disallowance made on Account of Depreciation on Payment of Brand License Fees [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, in its recent order directed the Assessing Officer (AO) to delete the disallowance made on account of depreciation on payment of brand license fees.

The assessee, M/s. Star India Pvt. Ltd. is engaged in producing and promoting television programs, movies, and broadcasting of the same on satellite television channels. The assessee also exports programs to overseas media companies and provides other media services. The assessee also acts as an agent for advertisement as well as for overseas media companies and carries all channel subscription business.

The AO disallowed the depreciation on payment of brand license fees and the same was accepted by the CIT(A). The order of the CIT(A) was challenged by the assessee.

The tribunal consisted of the Judicial Member Amarjeet Singh and the Accountant Member, M. Balaganesh while keeping in mind the earlier decision of the tribunal in the case of the same assessee, wherein it was held that once the payments including the amount have been approved by the competent authority (RBI), that had specifically considered the value of the brand license, fees paid for the STAR Mark and there cannot be any disallowance of expenses by the TPO that the assessee has not gained any benefits and no disallowance shall be made.

“We find that the year under appeal is the third year of the claim of depreciation by the assessee on payment of brand license fees. Respectfully following the aforesaid decision in assessee’s own case by this Tribunal, we direct the L’d. AO to delete the disallowance made on account of depreciation on payment of brand license fees,” the tribunal observed.