Genpact Services LLC Vs ACIT (ITAT Delhi)
In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Delhi has sided with Genpact Services LLC, confirming that customer contracts and assembled workforce acquired during a business takeover qualify as “intangible assets” eligible for depreciation. This decision, issued on June 6, 2025, for the Assessment Year 2019-20, allows Genpact’s depreciation claim stemming from its 2010 acquisition of a third-party debt collection firm.
The case, Genpact Services LLC Vs ACIT, centered on two primary disputes: the methodology for allocating support services costs and the eligibility of certain acquired assets for depreciation.
Genpact Services LLC, an Indian branch of Genpact LLC (USA), provides BPO services, including collections and analytics. For the Assessment Year 2019-20, the company filed its return declaring an income of INR 21,88,55,720. The case was selected for scrutiny following a survey conducted in February 2019.
Support Services Cost Allocation
The first dispute involved the allocation of shared support services costs. The Assessing Officer (AO) proposed changing Genpact’s cost allocation methodology from a “headcount ratio” to a “salary expenses ratio,” leading to a proposed disallowance of INR 9,58,81,838. The AO argued that the salary expense ratio was significantly lower than the headcount ratio across multiple financial years (FY 2011-12 to FY 2018-19), suggesting an inappropriate and unscientific method of cost charging that resulted in higher cost allocation to Genpact Services LLC.
