The Kolkata Bench of Income Tax Appellate Tribunal ( ITAT ) directed the Assessing Officer (AO) to grant Tax Deducted at Source (TDS) and advance tax credits to the amalgamated company, which were denied in the assessment order.
Deepshikha Trading Company,appellant-assessee, filed its return of income on 30.09.2018, showing a total income of Rs. 16,92,420/-. The case was selected for scrutiny due to reasons like amalgamation during the year and large deductions claimed. After reviewing the reply, the income was accepted in the order under section 143(3) of the Act.
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However, the credit for TDS of Rs. 1,23,331/- and advance tax of Rs. 1,75,000/- related to the amalgamating company was not allowed in the assessment order. Aggrieved by this, the assessee filed an appeal before the Commissioner of Income Tax(Appeals)[CIT(A)]. It was noted that the amalgamation of M/s. GMB Investments Pvt. Ltd. with the assessee took place in FY 2017-18, relevant to AY 2018-19.
In the appeal, the assessee argued that the credits for TDS and advance tax were shown in Form 26AS of the amalgamating company and were not claimed or refunded by it. The assessee also pointed out that the income from these credits was included in its accounts for the year and taxed accordingly. A claim for interest under section 244A for the short refund was also raised.
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The CIT(A) reviewed the case and dismissed the appeal, considering the order under section 143(3) as irrelevant. The assessee, after the amalgamation of Deepshikha Trading Company Pvt. Ltd. and M/s GMB Investments Pvt. Ltd., claimed TDS and advance tax credits from the amalgamating company. However, the CPC did not allow these credits in the intimation under section 143(1) or in the rectification order.
The CIT(A) noted that the issue related to the intimation under section 143(1), which is appealable, not the order under section 143(3). Referring to a similar case, the CIT(A) dismissed the appeal, treating it as unnecessary.
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The tribunal considered the arguments from both sides. The Departmental Representative (DR) supported the CIT(A)’s order, while the Authorised Representative(AR) pointed out that rectification applications filed under section 154 of the Act were still pending. It noted that the assessee included income from the amalgamating company in its return for AY 2018-19, and claimed TDS and advance tax credits accordingly.
The appellate tribunal referred to sections 199(1) and 198 of the Act, stating that the TDS and advance tax paid on behalf of the amalgamating company should be allowed to the amalgamated company. Since the assets and liabilities of the amalgamating company were taken over by the amalgamated company, the credits for TDS and advance tax should have been granted.
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The two member bench comprising Sonjoy Sarma (Judicial Member) and Rakesh Mishra (Accountant Member) ruled in favor of the assessee, set aside the CIT(A)’s order, and directed the AO to allow the TDS credit of Rs. 1,23,331/- and advance tax credit of Rs. 1,75,000/- while assessing the income of the amalgamated company.
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