TaxTMI 
TaxTMI 
2026 (6) TMI 922
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....ade by the AO? 2. Whether on the facts and circumstances of the case and in law, the CIT(A) is right in the decision the addition of Rs. 16,89,03,55/-on account of claim of depreciation on account of intangible asset as per provisions of 6th proviso to Section 32(1) of the Act? 3. Facts of the case are that the assessee is engaged in the business of providing Software Development and Information Technology Enabled Services like transaction processing, technological services and support services to its associate enterprises. According to the assessment order, during the year, there was purchase of business from M/s IBM India Pvt. Ltd. for consideration of Rs. 1,63,39,046/-. It was stated that the opening written down value of the intangible assets comprising of Goodwill only was Rs. 67,02,08,465/- and the assessee calculated depreciation upon amalgamation/ merger of M/s GlobeOp Financial Services (India) Pvt Ltd (GFSIPL) in the assessee company. Due to amalgamation, the assessee claimed depreciation of Rs. 16,89,03,559/- as intangible assets in the tax audit report and in the computation of income. The amalgamation of GFSIPL took place with the approval of Hon'ble Bombay....
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.... Securities Limited and applied the decision of the Hon'ble ITAT, Bangalore in the case of United Breweries Limited vs. Additional CIT (2016),in disallowing the depreciation of Rs. 16,89,03,559/- claimed on Goodwill. 4. Before the ld.CIT(A),it was contended by the assessee that the claim of depreciation on Goodwill was on account of acquisition of undertaking on "Slump sale" basis and not on amalgamation, as asserted by the AO in the assessment order. It was explained that during the year under consideration, it had claimed depreciation on goodwill amounting to Rs. 16,89,03,559/-, which comprised of depreciation at the rate of 25% amounting to Rs 16,75,52,116/- on the opening WDV of the intangible asset comprising of goodwill only amounting to Rs 67,02,08,465/-. This block of asset came into existence on 31 December 2017 i.e. during the AY 2018-19 in the books of GlobeOp Technologies owing to an acquisition of a unit in Gurgaon on slump sale basis pursuant to a Business Transfer Agreement ("BTA") with GlobeOp India dated 21 December 2017. During the year under consideration, a business unit was acquired from IBM India Private Limited ("IBM India") for a consideration of Rs. 1,35....
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....ssed for AY 2018-19. Accordingly, the said goodwill formed part of the block of assets viz. intangibles, of the assessee under section 2(11) of the Act for claim of depreciation in the subsequent assessment years. Depreciation of Rs. 13,51,443 (25% of Rs. 1,08,11,544 for 6 months) claimed on the goodwill arising on account of acquisition of IBM India unit during the year under consideration. 4.2 The assessee further explained that during the year under consideration, SS&C Technologies Holdings, Inc. ("SS&C US"), its ultimate parent company, entered into a global asset purchase agreement with International Business Machines Corporation, a third party New York Corporation. Pursuant to the aforesaid asset purchase agreement, GlobeOp Technologies acquired a business unit from IBM India (third party) vide agreement dated 29 November 2019. In consideration for the said transfer, the assessee paid an agreed portion of the purchase price that was allocated to India pursuant to the global asset purchase agreement Therefore, aforesaid acquisition of the business unit from IBM India, the assessee had recorded Goodwill of Rs. 1,08,11,544/- in its financial statements for FY 2019-20 and clai....
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....order i.e. the assessee claimed depreciation on goodwill due to amalgamation/ merger of Globeop India"s unit and IBM India"s unit with the assessee. The AO has also reproduced the following statement in the impugned order in which allegation was made that"the assessee submitted that "the amalgamation of GFSIPL & IBMIPL into assessee company can be characterised as amalgamation in the nature of merger." The AO further stated in the assessment order that during the course of the assessment proceedings, the assessee had submitted that all the assets, liabilities and reserves of IBM India were accounted for in the books of the assessee post amalgamation at their respective book values as appearing (in the books of GlobeOp India and IBM India) on the Appointed Date (i.e. 31 December 2017 and 29 November 2019 respectively).The AO also referred to Note 3(e) of the financial statements of the assessee for FY 2019-20 wherein accounting policy for amalgamation was provided. The AO failed to understand that the acquisition of business units by the assessee from GlobeOp India and IBM India was on a "slump sale basis" and not through amalgamation/ merger. The BTA executed with GlobeOp India and....
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....llowed in earlier year, and therefore principle of consistency to be followed. The assessee's claim of depreciation on goodwill on acquisition of Gurgaon unit from GlobeOp India had already been examined and allowed in the first year i.e. AY 2018-19. Once asset becomes a part of the block of asset and depreciation is granted, the issue cannot be agitated by the AO in the subsequent year. As per the provisions of section 32(1)(ii) of the Act, depreciation could be claimed on intangible assets being know how, patents, copyrights, trademarks, licenses, franchises or any other business or commercial rights of similar nature. The Supreme Court in the case of Smifs Securities (supra) held that based on the principle of "ejusdem generis", goodwill would fall under the expression "any other business or commercial rights of similar nature" and depreciation can be claimed on such Goodwill. 5. The ld.CIT(A) taking note of the submissions of the asessee as narrated in the preceding parasand taking cognizance of the submissions that the AO failed to understand that the acquisition of business units by the appellant from GlobeOp India and IBM India was on a "slump sale basis" and not through ....