THERMO FISHER SCIENTIFIC INDIA PRIVATE LIMITED ,MUMBAI V. THE DEPUTY COMMISSIONER OF INCOME TAX -15(3)(1), MUMBAI

ITA 2847/MUM/2025

AI Insights

The case involves Thermo Fisher Scientific India Private Limited appealing against the disallowance of depreciation on contracts acquired through slump sales from GSK and CTPL. The primary legal contention was whether the manufacturing and supply contracts qualified as intangible assets under section 32(1) of the Income Tax Act, 1961, and thus eligible for depreciation. The Tribunal considered previous rulings in the assessee's favor for similar transactions and found no new material or legal basis to deviate from those decisions, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717022 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2020-2021
• Appeal Filed On: 25-04-2025
• Other Referred Cases: Thermo Fisher Scientific India Pvt. Ltd. v/s DCIT, ITA No. 7845/MUM/2019, Thermo Fisher Scientific India Pvt. Ltd. v/s DCIT, ITA No. 2458/MUM/2015, Thermo Fisher Scientific India Pvt. Ltd. v/s DCIT, ITA No. 769/MUM/2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HIMANSHU JOSHI
• Assessee Lawyers: VIPUL SONI
• Keywords: Capital asset; Depreciation; Valuation report; Initiation of penalty proceedings; Scheme of amalgamation
• Section: 143(3); 80G

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ मुंबई मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, “E” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.2847/MUM/2025 Ǔनधा[रण वष[ / Assessment Year :2020-21 Thermo Fisher Scientific India Private Limited 403-404, Delphil B Wing, Hiranandani Business Park, Powai IIT, Mumbai-400 076 PAN : AABCT3207A ........अपीलाथȸ / Appellant बनाम / V/s. The Deputy Commissioner of Income Tax-15(3)(1), Mumbai ……Ĥ×यथȸ / Respondent Assessee by : Shri Vipul Soni Revenue by : Shri Himanshu Joshi, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing :14.08.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 20.08.2025 Printed from counselvise.com 2 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 आदेश / ORDER PER ARUN KHODPIA, AM: The present appeal filed by the assessee is directed against the order passed by the Ld. CIT(Appeals)/NFAC, Delhi dated 11.02.2025 for the assessment year 2020-21, as per the following grounds of appeal: “Disallowance of depreciation amounting to Rs.56,64,861/- on contracts acquired from Glaxosmithkline Pharmaceuticals Limited (GSK) 1. erred in not granting depreciation of Rs. 56,64,861/- on the written down value of the manufacturing and supply contracts under section 32(1) of the Act. 2. erred in disregarding the fact that such manufacturing and supply contracts are self-generated by GSK and have been acquired by the Appellant as a part of slump sale 3. erred in disregarding the valuation reports and concluding that such manufacturing and supply contracts are not an intangible asset as per Accounting Standard (AS.)-26 issued by the Institute of Chartered Accountants of India 4. without prejudice, erred in not considering the value of manufacturing and supply contracts as goodwill acquired from GSK. pursuant to slump sale, which is eligible for depreciation under section 32(1) r.w.s. 2(11) of the Act. Disallowance of depreciation amounting to Rs.1641,402/ on contracts acquired from Chemito Technologies Private Limited (CTPL) 5. erred in riot granting depreciation of Rs 16,-11 .10.'/ on the written down value of the contracts under section 32(1) of the Act. 6. erred in disregarding the fact that such contracts are self - generated by CTPL and have been transferred to the Appellant as a part of slump sale Printed from counselvise.com 3 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 7. erred in disregarding the valuation report and concluding that such contracts are not an intangible asset as per Accounting Standard ('AS')-26 issued by the Institute of Chartered Accountants of India 8. without prejudice, erred in not considering the value of such contracts as goodwill acquired from CTPL. pursuant to slump sale, which is eligible for depreciation under section 32(1) r.w.s. 2(11) of the Act. Initiation of penalty under section 270A for under- reporting in consequence of mis-reporting for the proposed adjustments 9. Erred in confirming the initiation of penalty proceedings under section 270A of the Act for under- reporting as a consequence of mis-reporting of income. The Appellant craves leave to add, alter, omit or substitute any or all of the above grounds of appeal, at any time before or at the time of the appeal.” 2. The brief facts in this case are that the assessee is engaged in the business of manufacturing, installation and sale (including trading) of scientific/medical laboratories equipment. The assessee has filed its return of income for A.Y.2020-21 on 15.02.2021 declaring total income at Rs.69,66,69,630/-. The case of the assessee was selected for complete scrutiny under the faceless assessment regime wherein the assessment unit had passed the assessment order dated 26.09.2022 u/s. 143(3) of the Income Tax Act, 1961 (for short ‘the Act’), assessing the total income of the assessee company at Rs.70,57,25,800/-. The assessment unit had made certain disallowances/additions viz. (i) disallowance of deduction u/s. 80G of the Act: Rs.17,50,000/-; and (ii) disallowance of depreciation of mfg and supply contracts: Rs.73,06,263/-. Printed from counselvise.com 4 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 3. Being aggrieved, the assessee preferred an appeal before the Ld. CIT(Appeals)/NFAC, wherein the disallowance u/s.80G of the Act was set- aside to the file of the A.O for verification and the disallowance of depreciation of Rs.73,06,263/- has been confirmed by it observing as follows: “5. Ground No.2 and 3 are disallowance on depreciation Rs.73,06,263/- 5.1 In the assessment order, the AO held that on perusal of details of depreciation claimed by assessee company during the year, it is seen that the assessee has claimed depreciation on manufacturing/supply contracts and maintenance contracts of Rs.73,06,263/-. The AO concluded that the assessee company has filed their submissions which are not different from the submissions made in the earlier assessment years. Since the similar conditions were made in the A.Y. 2015-16 and AY 2016-17. On the basis of detailed reasoning given in the earlier assessment year, the claim of depreciation amounting to Rs.73,06,263/- is disallowed and added back to the total income. 5.2 During the course of appellate proceedings, it is submitted that the appellant acquired Qualigens Fine Chemicals Division from Glaxosmithkline PharmaceuticalsLimited under business Transfer agreement (BTA) dated 26.7.2007 on a slump sale basis. On slump sale of Qualigens, amongst various assets as a part of the BTA, GSK also transferred manufacturing and supply/service contracts to the appellant. The appellant claimed depreciation @ 25% amounting to Rs. 56,64,861/- on the opening written down value as on 1st April, 2019 for the manufacturing and supply contracts it took over as a part of slump sale by GSK. The appellant also acquired Analytical Technologies and Environmental Instrumentation Division from Chemito Technologies P Ltd. under BTA dtd. 27.05.2008. On slump sale of the AT & El division. amongst various assets as a part of the BTA. CTPL also transferred various sales, annual maintenance contracts and comprehensive maintenance contracts with its customers which were under execution to the appellant. Accordingly, Thermo Fisher claimed depreciation @ 25% amounting to Rs.16,41,402/- on the opening written down value as on 1st April, 2019 of the maintenance and supply contracts. Printed from counselvise.com 5 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 5.2.1 It is further submitted that the said contracts were in the nature of commercial rights are rights which are obtained for carrying out the business effectively. Where there is a takeover of business, payment made for bundle of intangible rights and advantages together would fall under phrase business or commercial right. The intangible advantages acquired together with business i.e huge client base. on going contracts, licenses, employees, operational business segments, access to new sector through acquisition of business division — all together can be bundled to say that they are a business or commercial right acquired even if some of them are in nature of intangible advantage. 5.3 I have gone through the assessment order, ground of appeal, statement of facts as well as the appellant submissions. So far as claim of depreciation in case of intangible assets falling in the category of any other business or commercial rights of similar nature is concerned, all the business or commercial rights are not themselves assets eligible for depreciation, and that only those rights which are similar in nature with the know how, patents, copy rights, trade marks, licenses are eligible for claim of depreciation. 5.3.1 On similar issue in the case of the appellant for the A.y. 2016- 17, the DRO in their order in Din No. ITBA/DRP/F/144C(5)/2020- 21/1031022117(1) dtd. 26.2.2021 under sec. 114C(5) of the I T Act held as under : \"The DRP has noted that the assessee company has claimed depreciation based on Business Transfer Agreements and valuation reports of Bansi S. Mehta & Co. Chartered Accountants. The claim of depreciation has been rejected on the ground that as per Business Transfer Agreement, no intangible assets, such as manufacturing contracts and supply/maintenance contracts have been transferred to assessee company. Further, there is no evidencethat these intangible assets were self generated by M/s. GlexoSmithkline Pharma Ltd. (SK) an Chemito Technologies P Ltd. (CTPL) and the same were transferred to the assessee company. The manufacturing contracts and supply/ maintenance contracts are not intangible assets, which are eligible for claim of depreciation u/s. 32(1)(ii) of the I T Act. The present DRP has noted that the DRP has in the earlier years also not allowed depreciation on manufacturing contracts and supply/maintenance contracts. In view of this, the present DRP is unable to find any fault with the finding of the AO and hence no directions are being issued to the AO on this issue. Printed from counselvise.com 6 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 In view of this, the present DRP is unable to find any fault with the finding of the AO and hence no directions are being issued to the AO on this issue. \" 5.3.2 Material facts remain the same during the year under reference. Hence, following the views and findings of the DRP on this issue in the appellant's own case for the A.Y. 2016-17, the approach of the AO is held as justified and I am of the opinion that no interference is required in the assessment order. Hence, the addition of Rs.73,06,263/- is upheld and the ground No 2 and 3 are dismissed.” 4. Aggrieved with the aforesaid decision by the Ld. CIT(Appeals)/NFAC, the assessee preferred an appeal before the Tribunal, which is under consideration in the present matter. 5. At the very outset, the Ld. Counsel for the assessee company submitted that the issue regarding disallowance of depreciation on contracts acquired from Glaxosmithkline Pharmaceuticals Limited (GSK) and M/s. Chemito Technologies Private Limited (CTPL) pertains to the value of manufacturing and supply contracts which was not allowed by the A.O and also confirmed by the Ld. CIT(Appeals)/NFAC, has been duly examined by the jurisdictional ITAT, Mumbai in assessee’s own case vide ITA No.7845/MUM/2019 for A.Y.2015-16, dated 31.07.2025, wherein the said issue has been decided in favour of the assessee, by allowing the claim of depreciation on business and commercial rights acquired by the assessee,following the findings on similar issues inthe earlier order of the Tribunal in assessee’s case for A.Y.2010-11, ITA No.2458/MUM/2015, dated 16.07.2025. Printed from counselvise.com 7 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 6. In the backdrop of the aforesaid submissions, it was submitted by the Ld. Counsel that since the issue of controversy in present case is squarely covered by the decision of the jurisdictional ITAT in assessee’s own case, thecontentions raised herein deserves to be allowed. 7. Per contra, the Ld. Sr. DR vehemently supported the order of the Ld. CIT(Appeals)/NFAC. 8. We have heard the submissions of the parties herein, perused the material available on record and the decision of the ITAT in assessee’s own case,having adjudication on the issue in hand, in favour of the assessee. It is to be noted that the issue of disallowance on contracts acquired by the assessee from GSK and CTPL has been analyzed at length by the jurisdictional ITAT in assessee’s own case in ITA No.7845/MUM/2019 (supra), wherein the Tribunal has provided relief to the assessee observing as follows: “5.2. We note that the claim for depreciation in relation to the business/commercial rights acquired by the Assessee was first denied during the assessment proceedings for the Assessment Year 2010-2011.The issue travelled to the Tribunal and vide order, dated16/07/2025, Mumbai Bench of the Tribunal in the appeal preferredby the Assessee for the Assessment Year 2010-2011 [ITANo.2458/Mum/2015] decided the issue in favour of the Assessee anddirected the Assessing Officer to grant depreciation as claimed bythe Assessee in respect of business/commercial rights arising fromthe manufacturing contracts, supply contracts and maintenancecontracts holding as under: “6. Grounds no.2-5, raised in assessee‘s appeal, pertain to the claim of depreciation on manufacturing, supply andmaintenance contracts and goodwill pursuant to the Printed from counselvise.com 8 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 acquisitionof two undertakings in a slump sale arrangement in earlier years. 7. The brief facts of the case pertaining to this issue, asemanating from the record, are: The assessee is engaged inthe manufacturing, installation and sale (including trading) ofscientific/medical laboratory equipment and chemicals. For theyear under consideration, the assessee filed its return ofincome on 30/03/2011, declaring a total loss of INR21,55,61,952. During the assessment proceedings, uponperusal of the details of depreciation claimed by the assessee,it was observed that the assessee has claimed depreciation onmanufacturing contracts and supply/maintenance contractsbased on acquisition of undertakings from GSK Pharma Ltd andChemito Technologies Pvt. Ltd. Accordingly, the assessee wasasked to justify the allowability of claim of depreciation onmanufacturing contracts and supply/maintenance contracts. Inits response, the assessee placed reliance upon the BusinessTransfer Agreements, Valuation Report, and some judicialrulings. The Assessing Officer (―AO‖), vide draft assessmentorder dated 24/03/2014 passed under section 143(3) read withsection 144C of the Act, disagreed with the submissions of theassessee on the following basis: – (a) No such intangible assets, such as manufacturingcontracts, and supply/maintenance contracts have beentransferred to the assessee company in a slump sale. (b) No evidence of these intangible assets being self- generated, and the same were transferred to theassessee in a slump sale. (c) Manufacturing contract, and supply/maintenancecontracts are not akin to the assets identified under theprovision of section 32(1)(ii) of the Act. (d) From the valuation report, ―future economic benefits‖ and cost measurement‖ cannot be measured reliably. (e) Regarding the supply contracts purchased from GSKPharma Ltd, it is seen from the valuation report that theagreements are valid only for one year; thus, suchcontracts cannot be said to be enforceable in a court oflaw. Hence, these contracts are not going to createdefined future economic benefits, and thus, fail to qualifythe definition of intangible assets as per AccountingStandard-26. Printed from counselvise.com 9 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 (f) Regarding the maintenance contracts purchased fromChemito Technologies Pvt. Ltd., from the valuationreport, it is evident that the “future economic benefits” cannot be measured reliably. Thus, the ―maintenancecontracts do not satisfy the definition of an asset to berecognised as an intangible asset as per AccountingStandard-26. 8. Accordingly, the AO, vide draft assessment order, disallowedthe claim of depreciation made by the assessee in respect ofmanufacturing contracts and supply/maintenance contracts andadded the same to the total income of the assessee. 9. The learned DRP, vide its directions issued under section144C(5) of the Act, rejected the objections filed by theassessee on this issue on the basis that the assessee has notexplained why such a claim was not made by filing a revisedreturn. Accordingly, the action of the AO in not entertaining theclaim of the assessee was upheld. In conformity, the AOpassed the impugned final assessment order on this issue.Being aggrieved, the assessee is in appeal before us. 10. We have considered the submissions of both sides and perusedthe material available on record. During the assessment year2008-09, the assessee acquired by way of slump sale on agoing concern basis the Qualigens Fine Chemicals Division fromGSK Pharma Ltd. Further, during the assessment year 2009-10, the assessee acquired on a slump sale basis the AnalyticalTechnologies and Environmental Instrumentation Division fromChemito Technologies Pvt. Ltd. As per the assessee, amongstvarious other assets acquired as part of the above-mentionedslump sale acquisitions, the assessee, inter-alia, acquiredcertain business/commercial rights in the form of certainmanufacturing contracts, supply contracts and maintenancecontracts, which were recognised by the assessee as intangibleassets in the financial statements of the concerned year inaccordance with the asset recognition criteria as stipulatedunder Accounting Standard- 26. Further, the assessee treatedthe difference between the purchase consideration paid and thevalue of all assets (tangible and intangible assets) acquired inthe slump sale as goodwill in its financial statements. Insupport of the submission that the impugned contracts qualifyas intangible assets as per the Accounting Standard-26 andwere accordingly recorded in the assessee‘s books of accountsas separate intangible assets, the assessee placed relianceupon the valuation reports from Bansi S. Mehta and Printed from counselvise.com 10 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 Company,Chartered Accountants for acquisition of undertakings fromGSK Pharma Ltd and Chemito Technologies Pvt. Ltd. During thehearing, reliance was also placed on the response to commentsof the AO by Bansi S. Mehta and Company and additionalopinion on the valuation report from M/s Anmol SekhriConsultants Private Limited. Without prejudice to the aforesaidsubmission, the learned AR, inter-alia, submitted that evenassuming without accepting that the consideration paid forthese contracts does not constitute a separate intangible asset,the same would be liable to be considered as goodwill, i.e. thedifference between the purchase consideration and the netassets value, and the depreciation is allowable on goodwillbeing an intangible asset. 11. On the contrary, the learned Departmental Representative (“learned DR”) submitted that as per the provisions of theAccounting Standard-26, manufacturing contracts, supplycontracts and maintenance contracts acquired by the assesseepursuant to the above-mentioned slump sale acquisitionscannot be recognized as intangible assets. The learned DRfurther submitted that the Accounting Standard- 26 specificallyrequires the capacity of an enterprise to control futureeconomic benefits from an intangible asset. However, in thepresent case, the assessee has not been able to demonstrateits capacity to control future economic benefits from thecontracts, which are only for the duration of 1 year, 2 years or5 years. It was further submitted that the cost of thesecontracts cannot be measured reliably. Thus, the learned DRsubmitted that these contracts cannot be recognized asintangible assets in view of the provisions of the Accounting standard-26. 12. In his rebuttal, the learned Authorised Representative (“learned AR”) submitted that the manufacturing contractsrelated to toll manufacturing sites are engaged in exclusivemanufacturing of Qualigens chemicals based on specificationsprovided by the assessee and the said toll manufacturers wereidentified in 1997 by GSK Pharma Ltd and have beenassociated with them for the past 10 years and have developedsignificant manufacturing efficiencies and better capacityutilisation leading to considerable cost advantages. Thus, thelearned AR submitted that the same is likely to continue in thefuture. As regards the supply contracts, the learned ARsubmitted that the Qualigens business enjoys a leadershipposition with about 30% market share in the specialtychemicals market, and thus, even though supply contractsentered into on an annual basis, majority of these relationshipswith customers/distributors Printed from counselvise.com 11 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 date back to 30 to 40 years andthus expected to be renewed and continued on year-on-yearbasis. Further, as regards the maintenance contracts, thelearned AR submitted that these contracts were entered intowith customers for annual maintenance of the products sold byChemito Technologies Pvt. Ltd. business and were entered onthe expiry of the warranty period of the products, normally fora period of 5 years. Thus, it was submitted that themaintenance contracts that were unexpired on the date oftransfer of business were transferred to the assessee and havebeen valued on the basis of the discounted net contributionarising from the maintenance contracts. Further, the learnedAR by referring to the sample copy of these contractssubmitted that these contracts continued between the partiesand the assessee beyond the period mentioned in the BusinessTransfer Agreements, which clearly demonstrates that thefuture economic benefits have flowed to the assessee from theimpugned contracts. 13. From the perusal of the details of manufacturing contracts,supply contracts and maintenance contracts acquired by theassessee pursuant to the above-mentioned slump saleacquisitions, forming part of the paper book from pages 73-83and pages 214-220, we find that only few of these contractscontinued in the year under consideration. Further, themaintenance contracts were all entered into on a yearly basis.However, as noted above, as per the assessee, the relationship with the manufacturer/customers/distributors has continued formany years, and these contracts are likely to continue infuture. Further, as noted above, it is the plea of the assesseethat these are specialty chemicals that enjoy a leadershipposition and due to continuing long-standing relationships, theassessee continued to enjoy future economic benefits. 14. In any case, it is pertinent to note that in the present case, thetotal consideration paid by the assessee for the afore-mentioned slump sale acquisitions from GSK Pharma Ltd andChemito Technologies Pvt. Ltd. includes consideration paid formanufacturing contracts, supply contracts and maintenancecontracts acquired by the assessee. Thus, even if it is assumedthat these contracts are not separate intangible assets undersection 32(1)(ii) of the Act, it cannot be disputed that theconsideration paid also covered the consideration for thesecontracts, and the said consideration was over and above thenet asset value of other recognised tangible and intangibleassets. We find that the coordinate bench of the Tribunal inassessee‘s own case in Thermo Fisher Scientific Printed from counselvise.com 12 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 India Pvt. Ltd.v/s DCIT, in ITA No. 769/Mum/2023, for the assessment year2009-10, vide order dated 31/07/2023 held that theconsideration paid over and above the fair value of the assetsand liabilities acquired by way of slump sale from GSK PharmaLtd and Chemito Technologies Pvt. Ltd. is attributable togoodwill. The relevant findings of the coordinate bench, in theaforesaid decision, are reproduced as follows: - “5.18 We have heard rival submission of parties. The issue indispute is claim of depreciation on Goodwill recognized by the assessee in two transaction of acquisition of twounits. The assessee claimed that those acquisitions arefor purchase of unit for lumpsum consideration, as goingconcerns in the nature of slump sale, which is subject tocapital gain tax us 50B in the hand of seller. Whereasthe according the Assessing officer the acquisitions arein the nature of amalgamation. Before us, the learnedcounsel has referred to various clauses of businesstransfer agreement (BTA) in respect of units acquiredfrom GSK and CTPL respectively.On perusal of relevantclauses referred, we find that transaction in both thecases are of slump sale and not, amalgamation as statedby the Assessing Officer. 5.19 The learned Assessing Officer has further relied on theExplanation 7 to section 43(1) of the Act, to hold thatassessee is not entitled for depreciation on the Goodwillrecognized. For ready reference, the relevantexplanation is reproduced as under: \"Explanation 7.—Where, in a scheme of amalgamation,any capital asset is transferred by the amalgamatingcompany to the amalgamated company and theamalgamated company is an Indian company, the actualcost of the transferred capital asset to the amalgamatedcompany shall be taken to be the same as it would havebeen if the amalgamating company had continued tohold the capital asset for the purposes of its ownbusiness. Explanation 7A.—Where, in a demerger, any capitalasset is transferred by the demerged company to theresulting company and the resulting company is anIndian company, the actual cost of the transferredcapital asset to the resulting company shall be taken tobe the same as it would have been if the Printed from counselvise.com 13 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 demergedcompany had continued to hold the capital asset for thepurpose of its own business : Provided that such actual cost shall not exceed thewritten down value of such capital asset in the hands ofthe demerged company.\" 5.20 On perusal of the above Explanation, we find that sameis in relation to transactions of amalgamation and notrelated to slump sale transactions, which is the case ofthe assessee. 5.21 The learned Assessing Officer has further reliedExplanation-2 to section 43(6) of the Act, which reads asunder: \"Explanation 2.—Where in any previous year, any blockof assets is transferred,— (a) by a holding company to its subsidiary companyor by a subsidiary company to its holdingcompany and the conditions of clause (iv) or, asthe case may be, of clause (v) of section 47 aresatisfied; or (b) by the amalgamating company to theamalgamated company in a scheme ofamalgamation, and the amalgamated company isan Indian company, then, notwithstandinganything contained in clause (1), the actual costof the block of assets in the case of thetransferee-company or amalgamated company, asthe case may be, shall be the written down valueof the block of assets as in the case of thetransferor- company or the amalgamatingcompany for the immediately preceding previousyear as reduced by the amount of depreciationactually allowed in relation to the said precedingprevious year. 5.22 On perusal of above Explanation, we find that it is inrelation to acquisition of a subsidiary company by itsholding company or vice versa and in relation totransactions of amalgamation and not in respect ofslump sale. 5.23 The learned Assessing Officer has further relied on fifthproviso (now sixth proviso) to section 32(1)(ii) of theAct, which is reproduced for ready reference: \"Provided also that the aggregate deduction, inrespect of depreciation of buildings, machinery,plant or Printed from counselvise.com 14 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 furniture, being tangible assets or know-how, patents, copyrights, trademarks, licences,franchises or any other business or commercialrights of similar nature, being intangible assetsallowable to the predecessor and the successor inthe case of succession referred to in clause (xiii),clause (xiiib) and clause (xiv) of section 47 orsection 170 or to the amalgamating company andthe amalgamated company in the case ofamalgamation, or to the demerged company andthe resulting company in the case of demerger, asthe case may be, shall not exceed in any previousyear the deduction calculated at the prescribedrates as if the succession or the amalgamation orthe demerger, as the case may be, had not takenplace, and such deduction shall be apportionedbetween the predecessor and the successor, orthe amalgamating company and the amalgamatedcompany, or the demerged company and theresulting company, as the case may be, in theratio of the number of days for which the assetswere used by them.\" 5.24 On plain reading of the above proviso, it is clear thatsame is in relation to allocation of the depreciation onthe asset between predecessor and successor entities,whereas in the instant case goodwill was not in existenceas intangible asset in the case of predecessor companiesfrom whom the assessee has acquired correspondingunits under slump sale. Therefore, the said provision isalso not applicable of the facts of the instant case. 5.25 The ratio is in the case of United Breweries (supra) isalso not applicable over the facts of case as in the saidcase there was amalgamation of the three wholly ownedsubsidiaries whereas in the instant case there is aacquisition of units of third parties by way of slump sale. 5.26 The learned DR before us submitted that allocation ofvalues to the fixed asset acquired has been on lower sidefor creating goodwill as intangible asset. But in ouropinion, if the quantum of goodwill is reduced, thevaluation of the fixed asset will increase, which are alsoeligible for depreciation and thus in the exercise ofreallocation of values among the goodwill and other fixedasset, will be a revenue neutral exercise. Printed from counselvise.com 15 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 5.27 In view of the above discussion, we concur with thearguments of the learned counsel of the assessee thatgoodwill arising from transactions of acquisition of unitsof GSK and CTPL, is eligible for depreciation under theprovisions of the Act. As far as claim of the assessee forallowing depreciation on said goodwill corresponding toassessment year 2008-09, we are of the opinion thatclaim with respect to depreciation for assessment years2008-09, cannot be allowed in the appeal forassessment year 2009-10. It is for the assessee toexplore necessary remedy under the provisions of theAct or any other legal remedy as advised. The groundNo.2 (two) of the appeal of the assessee is accordinglyallowed. 15. Therefore, we are of the considered view that the entireexercise of determining the nature of manufacturing contracts,supply contracts and maintenance contracts acquired by theassessee from the afore-mentioned slump sale acquisitions ismerely academic, as even if these contracts are not consideredas separate intangible assets as per the provisions ofAccounting Standard-26, even then the excess considerationpaid over and above the fair value of the recognised assets andliabilities acquired by way of slump sale transactions has beenheld to be goodwill in nature and the assessee was alloweddepreciation on the same under the provisions of the Act bythe coordinate bench of the Tribunal. Accordingly, acceptingthe alternative plea of the assessee and respectfully followingthe decision of the coordinate bench of the Tribunal rendered inassessee‘s own case, we direct the AO to treat the excess ofconsideration paid over and above the fair value of the assetsand liabilities as goodwill and allow the depreciation on same tothe assessee under the provisions of the Act. On similar lines,the depreciation on goodwill amounting to INR 15,96,20,019claimed by the assessee in the year under consideration is alsoallowed. As a result, grounds no.2-5, raised in assessee‘sappeal, are allowed. 5.3. It is admitted position that the depreciation claimed by the Assesseefor the Assessment Year 2015-2016 pertains to the samebusiness/commercial rights in respect of which depreciation claim ofthe Assessee has already been allowed in the appeal preferred bythe Assessee for the Assessment Year 2010-2011. The Revenue hasfailed to bring on record any Printed from counselvise.com 16 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 material to differentiate the abovedecision of the Tribunal either on facts or in law. Therefore,respectfully following the decision of the Tribunal in the case of theAssessee for the Assessment Year 2010-2011 [ITANo.2458/Mum/2015, 16/07/2025], we direct the Assessing Officer toallow deprecation of INR.3,07,88,534/- claimed by the Assessee inrespect of business/commercial rights arising from themanufacturing contracts, supply contracts and maintenancecontracts. Thus, Ground No. 2 & 3 raised by the Assessee areallowed.” 9. Considering the overall facts and circumstances of the present case and the decision of the Tribunal on the similar issue for earlier year in the assessee’s case, in absence of any new material or distinguishing decision in favour of the revenue that would have brought on record by the revenue, we respectfully follow the decision of the Tribunal in assessee’s own case for A.Y.2015-16, which was passed considering the analogy drawn by the Tribunal in assessee’s case for A.Y.2010-11. Accordingly, we are of the considered view that the identical claim of the assessee for depreciation on the business/commercial rights arising from the manufacturing contracts, supply contracts and maintenance contracts is allowable. We, therefore, allow the Grounds of appeal No. 1 to 8 of the assessee’s appeal. 10. Regarding Ground of appeal No.9 which pertains to the initiation of penalty u/s. 270A of the Act for under-reporting in consequence of mis- reporting on account of the proposed adjustments, we are of the considered view that imposing of such penalty is totally dependent on the outcome of decision regarding disallowance of the depreciation in the Printed from counselvise.com 17 Thermo Fisher Scientific India Private Limited Vs. DCIT-15(3)(1), Mumbai ITA No. 2847/MUM/2025 assessee’s case, therefore, the same is consequential in nature and premature at this stage. 11. In the result, appeal of the assessee is allowed as per our aforesaid observations. Order pronounced in the open court on 20th August, 2025. Sd/- Sd/- AMIT SHUKLA ARUN KHODPIA (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) मुंबई/Mumbai; Ǒदनांक / Dated : 20th August, 2025. SB, Sr.PS (on Tour) आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ /The Appellant. 2. Ĥ×यथȸ /The Respondent. 3. आयकरआयुÈत/The CIT, Mumbai 4. Ĥधानआयकर आयुÈत/ Pr.CIT, Mumbai 5.ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,मुंबईबɅच, मुंबई/DR, ITAT, Mumbai Benches, Mumbai. 6.गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // उप/सहायक पंजीकार )Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, मुंबई/ ITAT, Mumbai. Printed from counselvise.com "