2014 (1) TMI 1774 - AT - Income Tax

Tribunal allows MAT credit claim for amalgamated company, dismisses Revenue's appeal on disallowance.

The Assistant Commissioner of Income Tax, Company Circle I (3), Chennai Versus M/s. Caplin Point Laboratories Ltd.,

The Assistant Commissioner of Income Tax, Company Circle I (3), Chennai Versus M/s. Caplin Point Laboratories Ltd., - TMI Issues:1. Disallowance under section 14A of the Income Tax Act.2. MAT credit entitlement of an amalgamated company.Issue 1 - Disallowance under section 14A of the Income Tax Act:The case involved an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) IX, Chennai. The assessee, an individual, had filed a return admitting total income, and the assessment was completed under section 143(3) of the Act. The ld. CIT(Appeals) deleted the disallowance made by the Assessing Officer under section 14A of the Act. The Revenue raised an appeal before the Tribunal, but the ld. Counsel for the assessee did not raise any serious objection against the disallowance, leading to the allowance of this ground of appeal by the Revenue.Issue 2 - MAT credit entitlement of an amalgamated company:The second ground of appeal related to MAT credit of an amalgamated company. The main issue was whether the amalgamated company was entitled to claim MAT credit. The Assessing Officer denied the claim, stating that there was no provision under section 115JA and section 115JB of the Act to allow credit of an amalgamating entity in the hands of the amalgamated entity. However, the ld. CIT(Appeals) directed the Assessing Officer to allow the claim of the assessee, following a previous ITAT order. The Tribunal, after hearing both sides and considering the submissions, upheld the decision of the ld. CIT(Appeals) based on the principle that after amalgamation, the amalgamated company is entitled to all assets and liabilities of the erstwhile company. The Tribunal found no reason to interfere with the order passed by the ld. CIT(Appeals) and dismissed the grounds raised by the Revenue, thereby partly allowing the appeal filed by the Revenue.In conclusion, the judgment addressed issues related to disallowance under section 14A of the Income Tax Act and the entitlement of MAT credit to an amalgamated company. The Tribunal upheld the decision of the ld. CIT(Appeals) in allowing the claim of the assessee regarding MAT credit, based on the principles established in previous cases and the legal provisions governing amalgamation and MAT credit entitlement.