THERMO FISHER SCIENTIFIC INDIA P. LTD,MUMBAI vs. DCIT 15(3)(1), MUMBAI

ITA 577/MUM/2017Status: DisposedITAT Mumbai02 January 2026AY 2012-1367 pages
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What did the Tribunal hold?

The Tribunal held that the manufacturing, supply, and maintenance contracts acquired from GSK and CTPL are not intangible assets in the nature of goodwill eligible for depreciation under section 32(1) read with section 2(11) of the IT Act. The reasoning was that these contracts were not acquired as a distinct asset and were not capable of being transferred or alienated separately from the business. The Tribunal also noted that they were not self-generated assets. Consequently, the claim for depreciation on these contracts was denied. Regarding brought forward unabsorbed depreciation, the Tribunal found that since the primary claim for depreciation on the contracts was not allowed, the consequential claim for brought forward unabsorbed depreciation related to these contracts also failed. The issue of transfer pricing adjustment relating to the purchase of finished goods was remanded to the Assessing Officer for fresh consideration in light of the decision in the assessee's own case for AY 2008-09, where similar issues were decided. The Tribunal did not decide the issue of consequential depreciation on software expenses as it was not elaborated upon in the provided text.

What were the facts?

The assessee, Thermo Fisher Scientific India Pvt. Ltd., has filed appeals against final assessment orders passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961, for assessment years 2011-12, 2012-13, 2013-14, and 2014-15. These orders were passed pursuant to directions from the Dispute Resolution Panel (DRP). The appeals were heard together, with AY 2011-12 treated as the lead case. The core dispute revolves around the assessee's claim for depreciation on various contracts acquired from Glaxosmithkline Pharmaceuticals Ltd. (GSK) and Chemito Technologies Private Limited (CTPL), as well as brought forward unabsorbed depreciation and transfer pricing adjustments related to the purchase of finished goods and receipt of indenting commission.

What were the issues?

1. Whether the assessee is entitled to depreciation under section 32(1) read with section 2(11) of the IT Act on manufacturing, supply, and maintenance contracts acquired from GSK and CTPL, considering them as business or commercial rights or goodwill, and whether these are intangible assets as per AS-26. 2. Whether the assessee is entitled to consequential depreciation on software expenses capitalized in AY 2007-08. 3. Whether the assessee is entitled to allowance of brought forward unabsorbed depreciation for AYs 2008-09, 2009-10, and 2010-11, including that relating to goodwill purchased from GSK and CTPL, and software expenses. 4. Whether the transfer pricing adjustment relating to the purchase of finished goods, amounting to Rs. 5,60,52,674, is valid, considering the rejection of the assessee's economic analysis and comparable companies by the Transfer Pricing Officer (TPO) and DRP. Assessee's Contentions: - The contracts acquired from GSK and CTPL constitute business or commercial rights and goodwill, which are intangible assets eligible for depreciation under section 32(1) read with section 2(11) of the IT Act. - The DRP and DCIT erred in not granting depreciation on these contracts. - The assessee is entitled to brought forward unabsorbed depreciation from earlier assessment years. - The transfer pricing adjustment on finished goods is incorrect as the TPO and DRP erred in rejecting the assessee's economic analysis and comparable companies. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions on these issues.

Which sections of the Income-tax Act were involved?

Section 32(1),Section 2(11),Section 143(3),Section 144C(13),Section 144C(5),Section 92CA(3)

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Cases cited in this judgment(5)Show list

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SHRI VIKRAM SINGH YADAVSHRI SANDEEP SINGH KARHAIL

For Appellant: Shri Dhanesh Bafna, Shri Anmol Mahajan, Ms. Hinal Shah
For Respondent: Shri Pravin Salunkhe, Sr.DR

Heard together (4 matters)

ITA No.1236/MUM/2016
ITA No.7393/MUM/2017
ITA No.577/MUM/2017
ITA No.7294/MUM/2018

Read from the judgment's own cause title. This page is filed under one of them.

PER SANDEEP SINGH KARHAIL, J.M.

The assessee has filed the present appeals against the separate final assessment order passed under section 143(3) read with section 144C(13) of the Income Tax Act, 1961 ("the Act") pursuant to the directions issued by the learned Dispute Resolution Panel - 2, Mumbai ["learned DRP'], under section 144C(5) of the Act, for the assessment years 2011-12, 2012-13, 2013-14 and 2014-15. 2. Since all the appeals pertain to the same assessee, involving

The order continues below.

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