TMI Blog2023 (3) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... incurring the expenditure, the assessee has acquired a completely new business set up, which is nothing but an income generation tool. Therefore, in our view, the expenditure incurred is in the nature of capital expenditure. To that extent, we agree with the view expressed by the departmental authorities. Enhancement of income by FAA - whether FAA was justified in reducing the value of customer related contracts and goodwill by tinkering with the value determined by registered valuer? - As observed assessee has paid the consideration for acquiring the business on the basis of value determined by an independent valuer. It is a fact that the assessee has paid the consideration as determined by the Valuer for acquiring the business. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member For the Appellant : Sh. Tarandeep Singh, Advocate, Sh. Tarun Singh, Advocate For the Respondent : Sh. Anand Kumar Kedia, CIT (DR), Sh. Mrinal Kumar Das, Sr. DR ORDER PER SAKTIJIT DEY, JM: Captioned appeal by the assessee arises out of order dated 15.02.2016 of learned Commissioner of Income Tax (Appeals)-42, New Delhi, pertaining to assessment year 2010-11. 2. As could be seen from the grounds raised, basically, two issues arise for consideration. Firstly, whether the expenditure incurred by the assessee for acquiring customer contracts and assembled workforce from M/s. Genpact India is revenue or capital in nature and secondly, whether learned first appellate authority was justified in reducing the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business expenditure. 4. Being of the view that such expenditure incurred has given enduring benefits to the assessee, the Assessing Officer called upon the assessee to show-cause, as to why, it should not be treated as capital expenditure. In response to the query raised by the Assessing Officer, the assessee furnished detailed submission stating that by incurring the expenditure, the assessee has not derived any enduring benefit, nor acquired any capital asset. Therefore, it has to be allowed as revenue expenditure. The Assessing Officer, however, was not convinced with the submissions of the assessee. He observed, the assessee has recorded the payments in the books of account as intangible assets in terms of Accounting Standard -26 (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cannot be assigned to recruitment/training cost of employees that may have been imparted in the earlier years. He observed, the employees were not bound to work with the assessee, as, no such contract exists with the assessee in that regard. Thus, he was of the view that the amount of Rs.2,91,63,000/- cannot be assigned to employees cost. 6. More so, when the employees have been assured of same terms and conditions of services and emoluments as existed before, the agreement with the assessee and their services were deemed as continued. In the aforesaid premises, he was of the view that the Assessing Officer had granted excess depreciation, thereby, resulting in under assessment of income. Therefore, he issued notice proposing to enha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions and perused the materials on record. At the outset, we need to address the nature of expenditure incurred by the assessee, whether capital or revenue. Facts and materials on record clearly reveal that the assessee had incurred the cost of Rs.22.16 crores for acquiring customer collection services business of M/s. Genpact India, on slump sale as a going concerns on as is where is basis . Though, from the stage of assessment proceeding the assessee has made an attempt to justify its claim of revenue expenditure, however, no substantive evidence could be furnished by the assessee to demonstrate that the assessee had identical business activity of debt collection services. 8. In view of concurrent finding of departmental authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuer. It is a fact that the assessee has paid the consideration as determined by the Valuer for acquiring the business. There is nothing on record to suggest that the payment claimed to have been made for acquiring the business is either non-genuine or doubtful. At least, no such view, either express or implied, can be found either in the observations of the Assessing or learned first appellate authority. Thus, when the payment made by the assessee is not disputed and is in terms of an agreement between two parties, learned Commissioner (Appeals) cannot arbitrarily and unitarily reduce a part of the payment made for computing depreciation. In any case of the matter, the consideration paid by the assessee is supported by valuation report o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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