TDS credit allowed for merged companies even when certificates issued in demerged company's name

ITAT Ahmedabad allowed the assessee's appeal regarding denial of TDS credit following amalgamation and merger proceedings approved by NCLT. The tribunal held that resulting companies in demergers and transferee companies in transfers are eligible to claim TDS credit even when certificates are in the name of demerged/transferor companies. The CPC had considered income but denied corresponding TDS credit. The tribunal set aside CIT(A)'s order and directed AO to allow TDS credit after verifying relevant income assessment, noting the assessee was both deductor and deductee company was merged entity.

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Issues:
Appeal against order of CIT(A) concerning TDS credit not granted by CPC, Bengaluru under section 154 of the Income Tax Act, 1961 for AY 2021-22.

Detailed Analysis:
1. Facts of the Case: The assessee, M/s.Shiva Pharmachem Limited, filed its original return declaring a total income and entered into a scheme of arrangement with M/s.Tash Investment Pvt. Ltd. approved by NCLT. The amalgamation resulted in income transfer and TDS credit claims for AY 2021-22.

2. Grounds of Appeal: The appellant challenged the CIT(A)'s order, contending that TDS credit of Rs. 10,09,254/- was not granted by CPC, Bengaluru. The appellant argued that TDS credit should be allowed as per the scheme of arrangement and cited a judgment of ITAT Hyderabad in a similar matter.

3. Assessee's Contentions: The assessee's counsel argued that TDS credit was not granted by CPC despite the income being considered in the return. The counsel relied on a Mumbai ITAT decision in a similar case, emphasizing that TDS credit should be allowed if the relevant income was assessed in the assessee's hands.

4. Department's Response: The Departmental Representative supported the CIT(A)'s order and highlighted procedural aspects. However, it was acknowledged that the assessee was both Deductor and Deductee, and the CIT(A) should have considered the case on its merits.

5. Decision: Following precedents, the Tribunal set aside the CIT(A)'s order and directed the AO to allow the TDS credit to the assessee after verifying the assessment of relevant income for the year. The appeal of the Assessee was allowed, emphasizing the eligibility of the resulting company to claim TDS credit even if certificates were in the name of the amalgamated company.

This judgment addressed the issue of TDS credit not granted by CPC, Bengaluru, in the context of a scheme of arrangement resulting in income transfer. The Tribunal's decision emphasized the assessee's right to TDS credit if the relevant income was assessed, citing precedents supporting the eligibility of the resulting company to claim TDS credit. The judgment highlighted the importance of considering the factual and procedural aspects while determining TDS credit claims, ultimately allowing the appeal and directing the AO to grant the TDS credit to the assessee.

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