Customer Contracts and Assembled Workforce are “Intangible Assets”: ITAT Allows Genpact’s Depreciation Claim on Acquisition of Debt Collection Firm Acquisition in 2010 [Read Order]
ITAT allows Genpact’s depreciation claim, holding customer contracts and assembled workforce as intangible assets from its 2010 business acquisition.
![Customer Contracts and Assembled Workforce are “Intangible Assets”: ITAT Allows Genpact’s Depreciation Claim on Acquisition of Debt Collection Firm Acquisition in 2010 [Read Order]](https://images.taxscan.in/h-upload/2025/06/12/2043224-itat-delhi-intangible-assets-taxscan.webp "Customer Contracts and Assembled Workforce are “Intangible Assets”: ITAT Allows Genpact’s Depreciation Claim on Acquisition of Debt Collection Firm Acquisition in 2010 [Read Order]")
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) allowed Genpact Services LLC's claim for depreciation on customer contracts and assembled workforce, holding that these qualify as intangible assets under the Income Tax Act, 1961. Genpact Services LLC, the Indian branch of a U.S.-based company, had acquired a debt collection and analytics business from Genpact India Pvt....
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) allowed Genpact Services LLC's claim for depreciation on customer contracts and assembled workforce, holding that these qualify as intangible assets under the Income Tax Act, 1961.
Genpact Services LLC, the Indian branch of a U.S.-based company, had acquired a debt collection and analytics business from Genpact India Pvt. Ltd. in Financial Year 2009-10. As part of this acquisition, the company paid Rs. 22.16 crore towards customer contracts and the assembled workforce.
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In its return for AY 2010-11, the assessee claimed this amount as revenue expenditure. The Assessing Officer disallowed the claim, treating the amount as capital expenditure, and instead allowed depreciation only on Rs. 5.54 crore, which he considered the value of intangible assets.
The assessee appealed the decision, and the CIT(A) partly allowed the depreciation by considering only Rs. 16.05 crore as the value of intangible assets. Genpact then approached the ITAT, which, in a previous order for AY 2010-11, ruled in favour of the assessee and held that the full amount of Rs. 22.16 crore should be treated as the value of intangible assets and eligible for depreciation at 25%.
During the assessment for AY 2019-20, Genpact raised an additional ground seeking depreciation of Rs. 41.59 lakh on the written down value of these intangible assets, in line with the earlier ITAT order. The company argued that the depreciation should be allowed for the relevant year based on the consistent application of the earlier tribunal ruling.
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The two-member bench, comprising Judicial Member Anubhav Sharma and Accountant Member Brajesh Kumar Singh, considered the submissions of both sides. The tribunal agreed with the assessee and referred to its earlier decision that fully recognized customer contracts and assembled workforce as intangible assets. It also observed that the claim arose from admitted facts and was consistent with the treatment upheld in prior years.
The tribunal directed the Assessing Officer to grant depreciation accordingly and allowed the additional ground raised by the assessee. The appeal was allowed.
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