Merger - Return u/s 170A - Assistance in filing Returns

[Vivek]

Dear All,

Company A (Transferee) and Company B (Transferor) are merged effective 01-10-2022 as per NCLT order.

Now I am filing modified return of Company A for AY 23-24 by taking figures of Company from 01-10-22 till 31-03-2023.

Now Company B has balance in MAT credit and advance tax payments. How to carry forward these in the modified ITR. Please guide on specific fields where we can enter this information in the ITR.

Further, company has huge profits from period 01-04-22 till 30-09-22 and post this period there is loss, whereas huge advance tax payments are made in the Q3 & Q4 (i.e after cut off date), so how to account these in modified return.

[Ryan Vaz]

? Advance tax paid by Company B (even after 01-10-2022) must be claimed in Company A’s ITR
? MAT credit of Company B can be carried forward by Company A, subject to conditions
? Income/Loss must be split strictly up to effective date (not based on payment dates of advance tax)
? Proper disclosure must be made in Schedule IT, Schedule MATC, and Schedule Part A – General

Advance Tax Paid by Company B – How to Claim in Company A’s Modified ITR

Legal Position

Under Section 170(2) and Rule 37BA(2):

Any advance tax paid by the predecessor is deemed to be paid by the successor, once succession takes place.

? Even if advance tax is paid in Q3 / Q4 (after 01-10-2022), credit belongs to Company A, since Company B ceases to exist.

[Ryan Vaz]

What If Company B Has Already Filed ITR?

Scenario	Action
ITR filed including full year income	Revise Company B’s ITR u/s 139(5) (upto 30-09-2023)
Company B PAN inoperative	File modified return of Company A with correct bifurcation
Refund mismatch	Expect CPC clarification / 154

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Recommended Documentation (Keep Ready)

• NCLT order (certified copy)

• Computation split (pre & post merger)

• MAT credit workings

• Advance tax challans of Company B

• Auditor certificate (recommended though not mandatory)

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AI Summary

Successor liability for advance tax ensures transferee claims predecessor's tax credits after merger, with income split at effective date. Successor company must claim advance tax paid by the transferor as its own and may carry forward the transferor's MAT credit subject to conditions. Income and losses are to be bifurcated strictly up to the effective date of succession regardless of payment dates. The modified return should disclose these adjustments in Schedule IT, Schedule MATC and Part A-General, with supporting documentation including the certified NCLT order, split computations, MAT workings, advance tax challans and recommended auditor certificate. If the transferor has already filed, revise its return and expect administrative rectification for any refund mismatches.