2023 (8) TMI 1485 - AT - Income Tax

Denial of TDS credit post amalgamation - Entitlement to TDS deducted in the hands of the transferor company on the event of amagamation - HELD THAT - Claim of the assessee is genuine as per the provisions of the Act and is squarely covered by the decision of Marshall Sons Co. (India) Ltd. 1996 (11) TMI 6 - SUPREME COURT wherein the Hon'ble Apex Court has held that every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer shall take place and it is true that while sanctioning the scheme, it is open to the Court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. However, if the Court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But, where the Court does not prescribe any specific date but merely sanctions the scheme presented to it, it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as the transfer date and it cannot be otherewise. Also examined the Form 26AS of the amalgamating companies and find that TDS is deducted in the name of transferee companies but that is immaterial when the scheme is approved by the Hon'ble High Court as post the appointed date, the TDS deducted in the hands of the transferor company shall belong to the transferee company. We, therefore, are not in concurrence with the conclusion drawn by Ld. CIT(A) that only assets of the amalgamated companies of the transferor companies were transferred and not the TDS. Consequently, we set aside the order of Ld. CIT(A) and direct Ld. AO to allow the credit to the assessee.

Summary

Issues:
Appeal against denial of TDS credit post amalgamation.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income-tax (Appeals) upholding the Assessing Officer's denial of TDS credit amounting to Rs. 3,31,880/- to the amalgamated company after the transferor company was merged with the assessee. The amalgamation scheme was approved by the Calcutta High Court, and the assessee claimed the TDS credit in its return of income, which originally belonged to the merged entities before the amalgamation. The Assessing Officer denied the claim, resulting in a liability for the assessee. The Commissioner of Income-tax (Appeals) upheld the Assessing Officer's decision, stating that only assets were transferred, not the TDS.

Upon reviewing the case, the Appellate Tribunal noted that the amalgamation scheme approved by the High Court specified the appointed date as 01.10.2020 and stated that all taxes, including TDS, belonging to the transferor companies from that date onwards would be treated as belonging to the transferee company. The Tribunal referred to a Supreme Court decision emphasizing the importance of the specified date in an amalgamation scheme. The Tribunal found the assessee's claim genuine and supported by the law.

The Tribunal also examined Form 26AS of the amalgamating companies and found that TDS was deducted in the name of the transferee companies, which was deemed irrelevant post the appointed date of amalgamation. The Tribunal disagreed with the Commissioner's conclusion that only assets were transferred, emphasizing that post the appointed date, the TDS deducted in the transferor company's hands belonged to the transferee company. Consequently, the Tribunal set aside the Commissioner's order and directed the Assessing Officer to allow the TDS credit of Rs. 3,31,880/- to the assessee. As a result, the appeal filed by the assessee was allowed, and the decision was made in favor of the assessee.