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The Tax Publishers Capital or revenue expenditure -- Spends incurred for acquiring customer contracts and assembled workforce Tinkering with valuation report questioning valuation report assumptions of certain parameters by CIT(A) *Facts:* Assessee, a US based corporate non-resident acquired an entity called Genpact India on slump basis for a consideration of Rs. 62.12 crores. Of this amount, Rs. 39.96 crores was for tangible assets. Balance of Rs. 22.16 crores was explained as it was for customer contracts and assembled workforce of the acquired entity. Assessee claimed this Rs. 22.16 as a revenue expenditure. It was the stand of the revenue that the same was a capital expenditure as they had claimed this as an intangible asset in their books. Assessee explained that they did not bring forth any benefit of enduring nature accordingly was a revenue spend. In disagreement AO made the disallowance of the same as capital expenditure. On appeal to CIT(A), he held it as capital expenditure. Besides, the CIT(A) also disturbed the depreciation claimed by the assessee questioning certain parameters of the professional valuation report of the slump sale obtained from Grant Thornton. Aggrieved assessee went in appeal to ITAT - Held in favour of the assessee - The disturbance of valuation parameters by the CIT(A) was uncalled for and they deserve to be quashed. CIT(A) travelled beyond his powers by doing thus. Held against the assessee - Since the assessee was not in the business of buying, selling of contracts or manpower the slump sale acquisition amount of Rs. 22.16 crore was held to be capital expenditure. *Case:* M/s. Genpact Services LLC v. DCIT 2023 TaxPub(DT) 780 (Del-Trib)

The Tax Publishers

Capital or revenue expenditure -- Spends incurred for acquiring customer contracts and assembled workforce

Tinkering with valuation report questioning valuation report assumptions of certain parameters by CIT(A)

Facts: Assessee, a US based corporate non-resident acquired an entity called Genpact India on slump basis for a consideration of Rs. 62.12 crores. Of this amount, Rs. 39.96 crores was for tangible assets. Balance of Rs. 22.16 crores was explained as it was for customer contracts and assembled workforce of the acquired entity. Assessee claimed this Rs. 22.16 as a revenue expenditure. It was the stand of the revenue that the same was a capital expenditure as they had claimed this as an intangible asset in their books. Assessee explained that they did not bring forth any benefit of enduring nature accordingly was a revenue spend. In disagreement AO made the disallowance of the same as capital expenditure. On appeal to CIT(A), he held it as capital expenditure. Besides, the CIT(A) also disturbed the depreciation claimed by the assessee questioning certain parameters of the professional valuation report of the slump sale obtained from Grant Thornton. Aggrieved assessee went in appeal to ITAT -

Held in favour of the assessee -

The disturbance of valuation parameters by the CIT(A) was uncalled for and they deserve to be quashed. CIT(A) travelled beyond his powers by doing thus.

Held against the assessee -

Since the assessee was not in the business of buying, selling of contracts or manpower the slump sale acquisition amount of Rs. 22.16 crore was held to be capital expenditure.

Case: M/s. Genpact Services LLC v. DCIT 2023 TaxPub(DT) 780 (Del-Trib)