India: Workforce acquired as part of business acquisition constitutes depreciable intangible asset (tribunal decision)
Workforce was “tool of trade” facilitating smooth conduct of acquired business.
The Income-tax Appellate Tribunal (Delhi Bench) held that a workforce acquired as part of the acquisition of a business constituted a depreciable intangible asset under section 32 of the Income-tax Act, 1961.
Relying on the Delhi High Court ruling in Areva T&D, the tribunal recognized the acquired workforce as a “tool of trade” facilitating smooth conduct of the acquired digital business. The tribunal rejected the tax authority’s allegation that the taxpayer inflated the value of the workforce, and thus the consideration paid for the workforce must be treated as non-depreciable goodwill, finding that the tax authority failed to substantiate its allegation.
The case is: T.V. Today Network limited v. ACIT (ITA No. 1449/Del/2024)
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