Transferred MAT credit on amalgamation is allowable, and denial through summary processing under section 143(1) is unsustainable.

On amalgamation, MAT credit earned by the amalgamating company under section 115JAA was treated as transferable to the amalgamated company because the statute did not prohibit such carry forward and set-off in that situation. The attempted denial of that credit through summary processing under section 143(1) was held unsustainable, as the issue required examination of relevant details and could not be conclusively decided within the limited scope of that provision; any further scrutiny would have to follow the regular assessment route. The transferred MAT credit was therefore recognised, and the adjustment made in summary processing was set aside.

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Issues: (i) Whether the amalgamated company was entitled to carry forward and set off MAT credit earned by the amalgamating company under section 115JAA of the Income-tax Act, 1961. (ii) Whether the adjustment denying such credit could be made in proceedings under section 143(1) of the Income-tax Act, 1961.

Issue (i): Whether the amalgamated company was entitled to carry forward and set off MAT credit earned by the amalgamating company under section 115JAA of the Income-tax Act, 1961.

Analysis: On amalgamation, the assets and liabilities of the amalgamating company stand vested in the amalgamated company. The provision governing MAT credit contained no prohibition against the amalgamated company availing the credit standing to the amalgamating company, and the specific restrictions contemplated by the statute did not cover the present situation.

Conclusion: The amalgamated company was entitled to the MAT credit of the amalgamating company, in favour of the assessee.

Issue (ii): Whether the adjustment denying such credit could be made in proceedings under section 143(1) of the Income-tax Act, 1961.

Analysis: The disallowance was made as a proactive adjustment in summary processing under section 143(1). Such a matter required scrutiny of the relevant details and could not be finally determined through that limited processing provision; if necessary, the Assessing Officer could proceed under section 143(2).

Conclusion: The adjustment under section 143(1) was not sustainable, in favour of the assessee.

Final Conclusion: The assessee succeeded in obtaining recognition of the transferred MAT credit, and the addition made in summary processing was set aside.

Ratio Decidendi: In amalgamation, MAT credit available to the amalgamating company can be availed by the amalgamated company where the statute does not prohibit it, and such a claim cannot be disallowed by a substantive adjustment in section 143(1) processing.

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