2024 (7) TMI 400 - AT - Income Tax

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

Shiva Pharmachem Limited Versus The Dy. CIT Circle-2 (1) 91) Vadodara

ITAT Ahmedabad allowed the assessee's appeal regarding denial of TDS credit following amalgamation and merger proceedings approved by NCLT. The tribunal ... Denial of TDS credit post amalgamation and merger proceedings - scheme of arrangement approved by NCLT - assessee contended that due to the scheme of arrangement, the operations and income of the amalgamated and merged company continued until the date of the NCLT order, while processing the return, the CPC considered the income but did not grant the corresponding TDS credit - HELD THAT:- The resulting company in a demerger and the transferee company in a transfer are eligible to claim TDS credit even if the TDS certificates are in the name of the demerged/transferor company. See ADANI GAS LTD. [2016 (1) TMI 940 - ITAT AHMEDABAD] and ULTRATECH CEMENT LTD. [2022 (1) TMI 923 - ITAT MUMBAI] As noted that the assessee itself is Deductor and Deductee company is a merged entity. Therefore, the Ld.CIT(A) should have decided on the facts and merits of the case. Thus, we set aside the order of the Ld.CIT(A) and direct the AO to allow the TDS credit to the assessee, after verifying that the relevant income has been assessed in this year. Assessee appeal allowed. 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.